Onex prices $396 million CLO; refinancings quiet; AAA, B tranches firm in secondary

By Cristal Cody

Tupelo, Miss., June 8 – CLO primary action is picking up with several new deals priced so far in June, market sources reported on Monday.

Onex Credit Partners, LLC priced about $396 million of notes in the new OCP CLO 2020-19 Ltd./OCP CLO 2020-19 LLC transaction, the manager’s second deal of the year.

The CLO will be supported by a diverse, global group of more than 20 investors, including 11 new investors, Onex said in a news release.

“Despite this being a challenging market for CLO liability issuance, we are continuing to identify opportunities for growth and this CLO is another step toward enhancing all our offerings,” Jason New, co-chief executive officer of Onex Credit, said in the release. “We are achieving strong execution in this market and remain one of only a few managers issuing BB-rated notes in the U.S.”

Several new CLOs priced last week, bringing year-to-date volume to $26 billion, while the refinancing market remains flat at $25 billion with no new issuance since March, BofA Securities Inc. analysts said in a research note released on Monday.

CLO spreads “have continued to rally, particularly for lower mezz bonds, as the tone in broader macro markets improve,” the analysts said.

In the secondary market, BWIC volume totaled $1 billion for the past week ended Friday, up from $810 million in the previous week, according to the BofA report.

“CLO AAA spreads tightened by 5 [basis points] while CLO BBB/BB spreads tightened by 25-50 [bps], respectively, as real and fast money accounts continued to deploy fresh capital across the stack,” the analysts said. “The tightening is in tandem with broader markets with higher quality CLO portfolios and cleaner profiles leading the rally. Of note this week, select BBs cleared at levels last seen earlier this year.”

AAA spreads improved 5 bps on the week to the Libor plus 170 bps average.

BB notes headed out 50 bps tighter on the week at an average Libor plus 1,025 bps, according to the report.

AA, A and B-rated tranches were flat on the week.

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