KKR Financial brings $412 million CLO deal; secondary market ‘feels firmer’

By Rebecca Melvin

New York, Nov. 17 – KKR Financial Advisors II LLC has priced $412 million of notes in the KKR CLO 13 Ltd./KKR CLO 13 LLC collateralized loan obligation deal, which matures January 2028, a market source said.

As the top of the deal structure, the CLO priced $2 million series X notes at Libor plus 100 basis points and $206 million of class A-1A senior secured floating-rate notes at Libor plus 152 bps.

In the secondary market, action in bid wanted in competition, or BWIC, lists was feeling “relatively busy” and “the levels felt like they were firming a bit,” a CLO investor told Prospect News.

Last week, BWIC volume was light, totaling just over $430 million, according to BofA Merrill Lynch research.

AAA BWICs moderated, but positioning in the investment-grade part of the capital structure continued to dominate activity with CLO 2.0/3.0 senior mezzanine volumes picking up modestly compared to prior weeks. As for the equity BWIC offerings, many investors are taking a wait-and-see approach ahead of a potential rate increase by the Federal Reserve in December, which has the potential of turning loan fund flows positive and boosting loan prices, BofA Merrill Lynch analysts wrote in securitization research published on Friday.

CLO spreads held steady last week compared to the week earlier. But spreads are predicted to tighten in the first quarter.

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