CLO primary action thins; new CLO spreads mostly flat in secondary trading; BBBs widen

By Cristal Cody

Tupelo, Miss., Sept. 15 – CLO primary action remains mostly quiet with light issuance forecast for the week, according to market sources on Tuesday.

“Following a month of low issuance in August, the first two weeks of September have seen little volume with just three deals pricing for a total of $1.3 billion in issuance,” Wells Fargo Securities, LLC analysts said in a market note on Tuesday. “Year to date, issuance is 86% of 2014 year-to-date volume, although we suspect that the fourth quarter may see a pickup in activity.”

In refinancing activity, Benefit Street Partners LLC refinanced $415 million of notes in a CLO originally priced in 2012, a market source said.

Citigroup Global Markets Inc. was the refinancing agent for the Benefit Street Partners CLO I, Ltd./Benefit Street Partners CLO I LLC deal. Final refinancing details were not available by press time.

Looking to the secondary market, new 3.0 CLO spreads were mostly flat over the past week, according to Wells Fargo Securities.

“U.S. 3.0 primary spreads saw little movement, with the exception of U.S. 3.0 BBB spreads, which widened by 10 bps,” the analysts said. “Spreads have generally widened over the past few weeks, due in part to increased volatility in the market as a result of concerns over China’s economy and commodity prices. Despite the recent widening, U.S. 3.0 AAA spreads are 10 bps tighter than where they started the year.”

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