Ares Management prices $714 Million CLO; CLO primary spreads steady at tight levels

By Rebecca Melvin

New York, March 7 – Ares Management LLC has priced its first CLO of the year, a $714 million transaction, with a yield spread for its AAA top tranche set at Libor plus 92 basis points, according to a market source on Wednesday.

Last spring, Ares Management priced with a spread of Libor plus 122 bps at the top of the stack.

The new Ares XLVII CLO Ltd./Ares XLVII CLO LLC transaction of notes due April 15, 2031 consists primarily of broadly syndicated first-lien senior secured U.S. bank loans.

Investment-grade spreads are near their tightest level in more than a decade as concerns of accelerating inflation have caused benchmark rates to rise. Meanwhile, CLO primary AAAs are now just inside investment-grade cash option-adjusted spread.

On Wednesday, rates were fluctuating but ultimately ended higher, with the yield on the benchmark 10-year Treasury note left standing at 2.883% at the end of the New York session from 2.877% on Tuesday.

The CLO has seen a modest drop for average CLO AAA, AA and single-A prices during February, based on the Palmer Square indices. Those prices were down by 10 bps to 20 bps, according to Wells Fargo Securities’ monthly market overview.

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