CLO primary quiet; BlackRock, Fifth Street see tightest prints of year; secondary slows

By Cristal Cody

Tupelo, Miss., June 1 – CLO primary action continues to slow headed into summer, while spreads remain mostly tight, accorded to market sources on Monday.

“Year to date, over $47 [billion] of BSL and MM deals have been issued in the U.S.,” BofA Merrill Lynch analysts said in a note on Monday. “We continue to expect loan supply to constrain near-term new-issue supply.”

New issues priced in the broadly syndicated and middle market spaces have achieved the tightest prints year to date.

BlackRock Financial Management, Inc. priced $535.47 million of notes in the Magnetite XIV, Ltd./Magnetite XIV LLC transaction via Deutsche Bank Securities, Inc. on May 20 and placed the AAA-rated notes at Libor plus 139 basis points.

The issuance is the “tightest print” since the beginning of the year, according to the BofA Merrill Lynch note.

Fifth Street Senior Floating Rate Corp. announced on Monday that it closed on its $309.98 million CLO, which achieved the tightest issuance of the year in the middle-market space.

FS Senior Funding Ltd./FS Senior Funding CLO LLC sold $126 million of class A-T1 floating-rate notes at Libor plus 180 bps in the senior tranche in the May 5 offering.

Meanwhile, U.S. CLO secondary trading slowed in the previous week with bid-wanted in competition volumes totaling just under $800 million, according to BofA Merrill Lynch. Trading mostly was concentrated in CLO 2.0 and 3.0 AAA notes.

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