Blackstone/GSO offers €558.05 million CLO; euro CLO spreads firm; U.S. secondary demand up

By Cristal Cody

Eureka Springs, Ark., April 26 – CLO primary action is expected to stay busier in the U.S. and European markets over the next month, sources said on Tuesday.

Blackstone/GSO Debt Funds Management Europe Ltd. intends to price €558.05 million of notes in a new euro-denominated CLO transaction this week.

Blackstone/GSO Debt Funds Management Europe is expected to price the notes in the Elm Park CLO Designated Activity Co. transaction, according to the company and a market source.

Meanwhile, European CLO spreads have been trading tighter in the secondary market.

European 2.0 CLO AAAs were trading about 5 basis points better in the Euribor plus 150 bps area, Wells Fargo Securities LLC analysts said in a note on Tuesday.

BB-rated notes have tightened about 40 bps to Euribor pus 760 bps.

Last week, “several BB bonds traded at discount margins in the low/mid to mid/high 700s at the start of the week, but similar bonds were trading in the low 700s by the end of the week,” according to a BofA Merrill Lynch market note.

In the U.S. CLO secondary market, demand has picked up, Wells Fargo analysts said.

“Spreads have continued to move tighter on increased demand; on a month-over-month basis, the AA, BBB and BB tranches are 40-75 bps tighter,” the analysts said. “The single A tranche has lagged the rally, just 15 bps tighter on the month.”

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