Palmer Square sells $702.55 million CLO; Oak Hill details reprint; Libor transition eyed

By Cristal Cody

Tupelo, Miss., Feb. 6 – In CLO market activity, Palmer Square Capital Management LLC priced $702.55 million of notes at par.

Also, Oak Hill Advisors LP sold $610.85 million of notes in a refinancing of a 2016 CLO.

Meanwhile, the Federal Housing Finance Agency’s announcement on Wednesday of the timetable for Fannie Mae’s and Freddie Mac’s transition from the Libor benchmark is positive for U.S. securitizations, according to Moody’s Investors Service Corp.

Among other steps, new language will be required for single-family uniform adjustable rate mortgage instruments closed on or after June 1, 2020, according to FHFA.

The timing for when the agencies will cease to purchase loans with Libor-based languages has implications for U.S. securitizations, Moody’s said.

“Fannie Mae and Freddie Mac’s plan to move away from Libor-based ARMs in the short term is a positive for the broader securitization market because it will likely encourage market participants across various asset classes to speed up their own responses to the potential cessation of the benchmark after 2021,” Moody’s vice president Jody Shenn said in an e-mailed statement.

“Spurring greater utilization of SOFR or other alternatives to Libor in securitization collateral and tranches would carry the benefit of reducing or eliminating Libor transition uncertainty for deals.”

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