CLO market activity slows as August approaches end; DFG, NewStar price CLO transactions

By Cristal Cody

Tupelo, Miss., Aug. 22 - Activity in the CLO market stayed relatively quiet on Thursday with desks half-staffed and many participants out for vacations for the rest of August, market sources report.

Additional details emerged for the recently priced NewStar Commercial Loan Funding 2013-1 LLC CLO, which is backed primarily by first-lien senior secured small and medium enterprise and broadly syndicated loans.

The CLO priced the Aaa-rated tranche at Libor plus 165 basis points and the tranche of notes on the bottom end of the capital structure at Libor plus 675 bps, according to a market source.

In other primary activity, DFG Investment Advisers, Inc. raised $367.9 million in a CLO offering, according to market sources.

The Vibrant CLO II Ltd./Vibrant CLO II LLC priced the triple A-rated tranche at Libor plus 128 bps and the tranche of B-rated notes at Libor plus 550 bps.

NewStar prices $400 million

NewStar Financial, Inc. sold $400 million of notes due Sept. 11, 2023 in the NewStar Commercial Loan Funding 2013-1 CLO, according to a market source.

The CLO priced $202.6 million of class A-T senior secured floating-rate notes (Aaa) at Libor plus 165 bps and $35 million of class A-R senior secured floating-rate notes (Aaa) at Libor plus 215 bps at the top of the capital structure.

The CLO also brought $38 million of class B senior secured floating-rate notes at Libor plus 230 bps; $36 million of class C secured deferrable floating-rate notes at Libor plus 380 bps; $21 million of class D secured deferrable floating-rate notes at Libor plus 455 bps; $6 million of class E secured deferrable floating-rate notes at Libor plus 530 bps; $17.4 million of class F secured deferrable floating-rate notes at Libor plus 550 bps; $15.2 million of class G secured deferrable floating-rate notes at Libor plus 675 bps and $28.8 million in the equity tranche.

Natixis Securities Americas LLC was the placement agent.

NewStar Financial, a Boston-based finance company, will manage the CLO.

DFG raises $367.9 million

In other pricing action, DFG Investment Advisers raised $367.9 million in the Vibrant CLO II offering of fixed-rate, floating-rate and subordinated notes due July 15, 2024, according to market sources.

The CLO priced $214.8 million of class A-1 senior secured floating-rate notes (Aaa/AAA/) at Libor plus 128 bps; $35.1 million of class A-2A senior secured floating-rate notes (/AA/) at Libor plus 175 bps; $10 million of 3.96% class A-2B senior secured fixed-rate notes (/AA/); $28.9 million of class B deferrable floating-rate notes (/A/) at Libor plus 275 bps; $18.8 million of class C deferrable floating-rate notes (/BBB/) at Libor plus 360 bps; $16.4 million of class D deferrable floating-rate notes (/BB/) at Libor plus 490 bps and $11.4 million of class E deferrable floating-rate notes (/B/) at Libor plus 550 bps.

The structure also included $1 million of class M deferrable floating-rate notes and $31.5 million of subordinated notes in the equity tranche.

Deutsche Bank Securities Inc. arranged the deal.

The CLO is backed by a revolving pool of primarily broadly syndicated senior secured corporate loans.

DFG, a New York City-based money manager, last brought a CLO offering in December when it priced the $317 million Vibrant CLO, Ltd. deal.

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