Sankaty sells $727.5 million CLO, places AAA paper at Libor plus 152 bps; primary steady

By Cristal Cody

Tupelo, Miss., March 19 - Year-to-date issuance in the U.S. collateralized loan obligation market climbed to more than $18 billion following a $727.5 million transaction from Sankaty Advisors LLC, according to informed sources on Wednesday.

Sankaty Advisors brought the AAA tranche at Libor plus 152 basis points, a source said.

The tranche priced on the tight side of other U.S. CLO AAA securities brought in March in the Libor plus 145 bps to Libor plus 159 bps area, according to market sources.

The CLO primary market is expected to be steady through spring with more than $16 billion of deals in the pipeline, a market source said.

Sankaty prices $727.5 million

Sankaty Advisors priced the $727.5 million Avery Point IV CLO Ltd./Avery Point IV CLO Corp. deal via Morgan Stanley & Co. LLC, according to an informed source.

The CLO priced $4 million of class X senior floating-rate notes (//AAA) at Libor plus 100 bps and $427 million of class A senior secured floating-rate notes (//AAA) at Libor plus 152 bps at the top of the structure.

The CLO also sold $66.25 million of class B-1 floating-rate notes at Libor plus 210 bps; $10 million of 4.35% class B-2 fixed-rate notes; $66.5 million of class C floating-rate notes at Libor plus 300 bps; $39.25 million of class D floating-rate notes at Libor plus 350 bps; $36.75 million of class E floating-rate notes at Libor plus 460 bps; $16 million of class F floating-rate notes at Libor plus 500 bps and $61.75 million of subordinated notes.

Sankaty Advisors will manage the CLO.

The notes are due April 15, 2026.

The deal is backed primarily by broadly syndicated senior secured corporate loans.

Proceeds will be used to purchase assets to reach a target leveraged loan portfolio of about $700 million.

Boston-based Sankaty, the credit investment unit of Bain Capital LLC, was in the primary market in 2013 with the $516.75 million Avery Point II CLO Ltd./Avery Point II CLO Corp. deal and the $514.16 million Avery Point III CLO Ltd./Avery Point III CLO Corp. transaction.

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