CLO spreads flat; supply positive; OCP prices; Guggenheim preps $512.75 million CLO

By Cristal Cody

Tupelo, Miss., Nov. 3 – Benchmark CLO spreads ended October flat following the release of finalized risk retention rules for U.S. CLO managers, according to a J.P. Morgan Securities LLC market note.

CLO AA-rated notes were quoted unchanged at Libor plus 150 basis points, while BBB spreads were flat at Libor plus 320 bps.

“CLO market technicals may improve but on the margin, as net supply is likely to remain positive,” JPMorgan analysts said in the note. “We expect U.S. CLO gross supply to decline but remain elevated on a historical basis. We reiterate our $70-80 [billion] gross forecast for FY 2015, which though down 30-40% y-o-y would still mark the 5th highest all-time total.”

In new issuance, Onex Credit Partners, LLC sold $514 million of notes in a private placement offering, according to a statement on Monday from parent company Onex Corp.

The OCP CLO 2014-7 Ltd./OCP CLO 2014-7 Corp. transaction priced via Citigroup Global Markets Inc., a market source said.

Onex said it purchased a majority of the equity in the transaction.

Final pricing details were not available by press time.

Onex Credit Partners previously priced $1,001,750,000 of notes in the OCP CLO 2014-6 Ltd./OCP CLO 2014-6 Corp. deal on May 22. The credit investing arm of Toronto-based Onex Corp. brought the $420 million OCP CLO 2014-5 Ltd./OCP CLO 2014-5 Corp. offering on March 4, 2014.

Guggenheim offers $512.75 million

Guggenheim Partners Investment Management, LLC is in the pipeline with the $512.75 million Ziggurat CLO Ltd./Ziggurat CLO LLC deal, a market source said.

The offering includes $290 million of class A-1 floating-rate notes (Aaa); $25 million of class A-2 fixed-rate notes (Aaa); $39 million of class B-1 floating-rate notes (Aa2); $25 million of class B-2 fixed-rate notes (Aa2); $24.5 million of class C floating-rate notes (A2); $31.5 million of class D floating-rate notes (Baa3); $25 million of class E floating-rate notes (Ba3); $10 million of class F floating-rate notes (B2) and $42.75 million of subordinated notes.

BofA Merrill Lynch is the placement agent.

Guggenheim, a New York- and Chicago-based investment management firm, sold $76.1 million of new notes due Jan. 31, 2025 in a fifth and final funding of the Guggenheim Private Debt Fund Note Issuer, LLC CLO vehicle in May.

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