Euro CLOs hold 130 bps area for AAA slice; new U.S. CLO AAAs price 135 bps-150 bps range

By Cristal Cody

Tupelo, Miss., Oct. 28 - Global issuance in the collateralized loan obligation market totals nearly $73 billion in more than 150 deals, including about €6 billion in 14 European transactions, according to market sources.

About $15 billion of new CLOs are in the pipeline, including the $556.15 million Golub Capital Partners CLO 17, Ltd./Golub Capital Partners CLO 17 LLC deal from GC Investment Management in the U.S. market and CQS Management, Ltd.'s €362.2 million Grosvenor Place 2013-1 European CLO, sources said.

In U.S. new issuance, CLO AAA notes have priced in October with spreads from the 135 basis points to 150 bps plus Libor area, according to a note from J.P. Morgan Securities LLC analysts.

Across the rest of the capital structure, October pricing levels in U.S. AA-rated notes have been in the 190 bps to 225 bps plus Libor range, A-rated slices in the 315 bps to 350 bps area, BBB notes in the 415 bps to 440 bps range and BB tranches in the 615 bps to 650 bps range, the note said.

"The HY loan market has been volatile and some CLO managers have told us they've been able to pick up spread in recent syndications and some secondary trades," the analysts said.

In the secondary market, sources report that U.S. AAA CLO spreads are in the 145 bps to 147 bps area.

Euro CLO spreads headed into the month's close were seen at 130 bps plus Euribor range for AAA notes; in the 210 bps plus range for AA spreads; in the 310 bps spread area for A-rated notes; at 510 bps plus Euribor area for BBB-rated tranches and in the 730 bps plus Euribor area for BB slices, according to the JPMorgan note.

Onex closes fourth CLO

In other market activity on Monday, Onex Corp. reported that Onex Credit Partners, LLC closed on the recently priced $514.35 million private placement CLO transaction, its fourth CLO offering.

The OCP CLO 2013-4 Ltd./OCP CLO 2013-4 Corp. deal included $40 million of subordinated notes in the equity tranche purchased by Onex.

The offering was expected to close on Thursday.

The Toronto-based private equity firm manages more than $3.3 billion in senior secured loans and high-yield bonds.

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