CLO primary market shows sign of activity; Babson preps $407 million deal; B notes weak

By Cristal Cody

Tupelo, Miss., Jan. 12 – The first CLO deals of the year are expected to price later in January, according to market sources.

Details of a new CLO offering in the pipeline from Babson Capital Management LLC emerged. The CLO manager plans to bring a $407 million CLO transaction.

In the broader CLO market, AAA spreads were quoted in the Libor plus 165 basis points area. Mezzanine notes remain soft with B-rated notes in the Libor plus 1,000 bps area, according to the market source.

Babson Capital Management plans to price $407 million of notes due April 15, 2027 in the new CLO deal, according to a market source.

The Babson CLO 2016-I Ltd./Babson CLO 2016-I LLC offering includes $2.5 million of class X floating-rate notes (/AAA); $248 million of class A floating-rate notes (/AAA); $31 million of class B-1 floating-rate notes; $16 million of class B-2 fixed-rate notes; $26.5 million of class C deferrable floating-rate notes; $24.5 million of class D deferrable floating-rate notes; $22 million of class E deferrable floating-rate notes and $36.5 million of subordinated notes.

Morgan Stanley & Co. LLC is the placement agent.

Babson Capital Management will manage the broadly syndicated CLO backed primarily by senior secured loans.

The CLO has a non-call period set to end on April 15, 2018 and a reinvestment period scheduled to end on April 15, 2020.

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