New issue CLOs price mostly tighter; CLO spreads unchanged in secondary market

By Cristal Cody

Tupelo, Miss., Oct. 2 – CLO pricing action remained steady, while the secondary market saw some activity as September ended, sources reported on Monday.

Four new deals priced in the past week, including GSO/Blackstone Debt Funds Management LLC’s previously reported $1.02 billion Gilbert Park CLO, Ltd./Gilbert Park CLO, LLC deal, according to a BofA Merrill Lynch note.

The Gilbert Park CLO sold $650 million of class A senior secured floating-rate notes at Libor plus 119 basis points in the senior tranche. Morgan Stanley & Co. LLC was the placement agent.

Almost all of the CLOs priced at the end of the month “priced at marginally tight levels, especially in the middle of the capital stack,” the BofA Merrill Lynch analysts said. “New issue BBB spreads now stand at 306 [bps], down from 319 [bps in the previous week].”

In the secondary market, spreads ended September unchanged across the capital stack, the BofA Merrill Lynch note said. AAA-rated tranches were unchanged on Friday at Libor plus 110 bps.

Secondary trading volume has been thin in the securitized market but picked up slightly as September ended.

On Friday, $84.81 million of high-grade CBO/CDO/CLO issues and $129.76 million of non-investment-grade securities traded, according to Trace. Thursday’s session saw $93 million of investment-grade and $174.27 million of non-high-grade issues trade.

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