Credit Suisse prices $813.6 million Madison Park CLO; trend toward tighter spreads intact

By Rebecca Melvin

New York, May 1 – Pricing of the CLO market’s latest issue showed the continuation of a trend toward tighter spreads.

The top three tranches of the Madison Park Funding XVII Ltd./Madison Park Funding XVII LLC CLO by manager Credit Suisse Asset Management, LLC priced at a floating rate of Libor plus 145 basis points.

“The new issue prices that have been released in April show very strong pricing,” Deutsche Bank research analyst Bjarni K. Torfason wrote in a note published April 29.

The tighter pricing comes amid what appeared to be decent issuance. April issuance was not as strong as March, which was a record-breaker, but close to the average $10 billion mark.

New issuance is expected to drop off, but it hasn’t yet. Deutsche Bank’s Torfason notes that “as loan spreads have tightened more rapidly than CLO liabilities, expectations are for slower pace over the next few months unless CLO liabilities extend their tightening from earlier this year”

CLO spreads continue to move tighter, Wells Fargo Securities analysts Dave Preston and Jason McNeilis wrote in a note published Friday.

“BB spreads are 25 bps to 50 bps tighter than at the end of March 2015, and a recent deal pricing featured single-A spreads inside 300 bps, and BBB spreads inside of 400 bps, as well as a single-B tranche inside 800 bps. We expect tightening to continue, at least until loan supply allows for more primary issuance.”

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