Benefit Street closes deal; CLOs face losses from Constellis default; secondary softens

By Cristal Cody

Tupelo, Miss., Jan. 9 – In CLO market action on Thursday, Benefit Street Partners LLC closed on its previously reported $508.7 million Benefit Street Partners CLO XIX Ltd./Benefit Street Partners CLO XIX LLC deal.

The CLO had priced $320 million of the class A floating-rate notes at Libor plus 135 basis points at the top of the capital stack in December.

In other market activity, CLOs may be facing major losses following the default of Constellis Holdings, LLC after the company missed an amortization payment due on Dec. 31 on its $872 million first-lien term loan, according to Moody’s Investors Service, Inc. following a review of exposures to Constellis’ debt.

Constellis Holdings, a Reston, Va.-based holding company with roots in military contractor Blackwater, provides security services.

The company was downgraded by Moody’s on Jan. 3 to Ca from B3 and by S&P Global Ratings on Jan. 2 to SD from CC.

Looking at the secondary market, trading volume has been strong, though prices have softened week to date.

On Wednesday, $771.91 million of investment-grade CBO/CDO/CLO paper traded at an average 98.80 price and $317.01 million of lower-rated issues traded at an average 85.60, Trace data shows.

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