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.”

Moody’s said the decline in CLO issuance over the past year owes to a variety of factors, including credit concerns early in the year, a lack of new leveraged loan issuance and a strong pace of CLO refinancings late in the year.

KVK refinances CLO

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 and a withdrawal of notice of optional redemption by refinancing of the class D notes and notice of revised proposed first supplemental indenture on Tuesday.

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.

The Chicago-based CLO manager priced one new CLO deal in 2016.

Octagon refinances CLO

Octagon Credit Investors priced $713.4 million of notes due Dec. 16, 2024 in a refinancing of the 2013 Octagon Investment Partners XVIII, Ltd./Octagon Investment Partners XVIII, LLC transaction, according to a notice of proposed supplemental indenture and partial redemption by refinancing on Tuesday.

The CLO sold $422.3 million of floating-rate notes at Libor plus 113 bps in the class A-1-R tranche.

Nomura Securities International, Inc. was the placement agent for the offering.

Octagon Credit Investors priced three new CLOs and refinanced one vintage CLO in 2016.

The New York-based credit investment firm is majority owned by Conning & Co., an indirect subsidiary of Cathay Financial Holding Co. Ltd.

CSAM prices XV CLO refi

Credit Suisse Asset Management refinanced $623 million of notes due Jan. 27, 2026 in the vintage 2014 Madison Park Funding XV Ltd. CLO deal, according to a notice of executed first supplemental indenture on Tuesday.

The CLO priced $413.2 million of class A-1-R senior secured floating-rate notes at Libor plus 119 bps at the top of the capital structure.

J.P. Morgan Securities LLC was the refinancing agent.

Credit Suisse Asset Management, a unit of Credit Suisse Group AG, priced three U.S. CLOs and refinanced one vintage CLO in 2016.

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