KVK, Octagon, CSAM refinance vintage CLOs; volume not expected to meet refunding demand

By Cristal Cody

Tupelo, Miss., Feb. 22 – Three more CLO managers have refinanced vintage CLOs.

KVK Credit Strategies LP refinanced $468.95 million of notes from a 2014 transaction.

Octagon Credit Investors, LLC priced $713.4 million of notes in a refinancing of a 2013 deal.

Credit Suisse Asset Management, LLC refinanced $623 million of notes from a 2014 CLO.

More than $14 billion of vintage U.S. CLOs have been refinanced year to date, according to market sources.

Moody’s Investors Service said in its February CLO report released on Wednesday that “CLO demand is insufficient to meet the bulk of 2017-2021 refunding needs. Pre-2017 CLOs alone will not be sufficient to cover much of the corporate refinancing need, particularly when maturities peak in 2020-21.”

According to the report, “If new CLO issuance excluding CLO refinancings remains flat around the 2016 total of $72 billion, it will not be sufficient to meet corporate debt refunding needs, which will increase, peaking in 2021.”

In its deal, KVK Credit Strategies refinanced $468.95 million of notes due May 15, 2026 in the KVK CLO 2014-1 Ltd./KVK CLO 2014-1 LLC transaction, according to a market source.

The CLO sold $334,495,000 of class A-1-R senior secured floating-rate notes (/AAA expected/) at Libor plus 130 basis points in the senior tranche.

Goldman Sachs & Co. was the refinancing agent.

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