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Western Asset Management preps $400 million CLO; AAAs at Libor plus 150 bps-155 bps area
By Cristal Cody
Tupelo, Miss., Feb. 13 – Western Asset Management Co. joined the deal pipeline with a $400 million collateralized loan obligation transaction expected to price late in the month, according to an informed source on Thursday.
“There is a lot of stuff in the pipeline because so much didn’t get done last year,” a source said. “The market seems to be showing signs of life.”
About $15 billion of broadly syndicated and middle-market CLO transactions are in the pipeline, according to a market source.
Moody’s Investors Service said in a report that it is analyzing 26 proposed broadly syndicated CLOs and one potential CLO backed by small and medium-sized enterprise loans. Most of the deals are expected to close in the first quarter, Moody’s said.
AAA-rated new issue tranches for tier one CLO managers remain stuck in the Libor plus 150 basis points to 155 bps area, according to market sources.
The AAA-rated slice of the Mountain Hawk III CLO, Ltd. deal is talked to price at Libor plus 155 bps, an informed source said.
“If the market improves, it might tighten up talk,” the source said.
New $400 million CLO eyed
Western Asset Management plans to bring the $400 million Mountain Hawk III CLO offering via Deutsche Bank Securities Inc., an informed source said.
Western Asset Management will manage the CLO, which is backed by a revolving pool of broadly syndicated first-lien senior secured loans.
The Pasadena, Calif.-based fixed income manager priced two deals in 2013 that included the $501.25 million Mountain Hawk I CLO Ltd./Mountain Hawk I CLO LLC offering and the $518.05 million Mountain Hawk II CLO Ltd./Mountain Hawk II CLO LLC transaction.
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