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CLO pricing action remains thin in October; AAA notes modestly softer in secondary
By Cristal Cody
Tupelo, Miss., Oct. 13 – The CLO primary market remains thin in October following a light volume month in September, while spreads are flat to wider in the secondary market.
Credit Suisse Asset Management, LLC priced an $818 million deal, Atrium XII/Atrium XII LLC, via Credit Suisse Securities (USA) LLC, a market source said. Final ricing details were not available by press time.
“September marked the slowest non-January month for U.S. primary CLO issuance since July 2013, with just $4.9 billion in issuance,” Wells Fargo Securities LLC analysts said in a report on Tuesday. “October has been slightly more constructive, with three deals priced month to date for a total of $1.7 billion. We continue to expect a pickup in issuance as managers aim to close deals before year-end, but the new issue market continues to be challenged.”
Coming up in the deal pipeline, ICG Debt Advisors LLC plans to price $412.5 million of notes due 2028 in the ICG US CLO 2015-2, Ltd./ICG US CLO 2015-2 LLC transaction, according to a market source. Morgan Stanley & Co. LLC is the placement agent.
In the secondary market, AAA-rated notes are 10 basis points wider on the month, according to the Wells Fargo note. CLO 3.0 BBs were quoted 100 bps wider from a month ago at Libor plus 800 bps.
“CLO spreads have continued to soften since July, as 3.0 U.S. AAAs are trading at 160 bps,” the Wells Fargo analysts said. “The lower part of the capital stack has widened even further, with the 3.0 BB tranche 100 bps wider than a month ago.”
CLO 3.0 A tranches were flat in the Libor plus 315 bps area.
BBB-rated notes were quoted 35 bps wider from a month ago at Libor plus 470 bps.
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