CLO refinancings on the rise; ING, Sankaty refinance CLO securities with lower coupons

By Cristal Cody

Tupelo, Miss., March 12 - The number of refinancings in the collateralized loan obligation market may rise in 2014 following four refinanced and repriced transactions this year, according to informed sources on Wednesday.

ING Alternative Asset Management LLC priced $326.5 million in a refinancing of the ING IM CLO 2012-1, Ltd. deal and lowered the coupons by 25 basis points to 140 bps, a source said.

Sankaty Advisors LLC sold $362 million in a refinancing of the Race Point V CLO, Ltd. transaction, shaving the coupons by 30 bps to 100 bps, according to an informed source.

Earlier in the year, Prudential Investment Management, Inc. refinanced the $304.85 million Dryden XXII Senior Loan Fund/Dryden XXII Senior Loan Fund Corp. deal on Jan. 15 and Apollo Global Management, LLC came by on Jan. 28 to reprice the $436.7 million ALM V, Ltd./ALM V LLC transaction, according to informed sources.

Three CLOs were refinanced in 2013, according to market sources.

Up to $20 billion to $30 billion of CLOs "could be candidates of refinancing this year," according to a J.P. Morgan Securities LLC market note. "However, the actual refinancing volume could be much lower, given there is upfront cost and friction to do so and the supply would be competing with secondary CLO paper for buyers and would also depend on AAA market pricing."

In the CLO primary market, sources expect steady issuance to continue through April. About $18 billion of deals are in the pipeline, a source said.

ING prices $326.5 million

ING Alternative Asset Management sold $326.5 million of notes due March 14, 2022 in a refinancing of the ING IM CLO 2012-1, Ltd. transaction, according to an informed source.

ING IM CLO 2012-1R, Ltd. priced $227 million of class A-1R floating-rate notes at Libor plus 120 bps, 25 bps tighter than where the original tranche priced.

The CLO also sold $32.5 million of class A-2R floating-rate notes at Libor plus 185 bps, compared to where the original tranche priced at Libor plus 300 bps.

ING priced $27.75 million of class BR deferrable floating-rate notes at Libor plus 275 bps, 140 bps tighter than the original offering.

ING brought $16.25 million of class CR deferrable floating-rate notes at Libor plus 370 bps, 130 bps better than where the securities first priced.

The CLO sold $14 million of class DR deferrable floating-rate notes at Libor plus 520 bps, tighter than where the original tranche priced at Libor pus 620 bps.

In addition, the CLO placed $9 million of class ER deferrable floating-rate notes at Libor plus 650 bps, 50 bps firmer than where the tranche originally priced.

Credit Suisse Securities (USA) LLC arranged the refinancing.

The original $361.9 million transaction priced in March 2012 via Credit Suisse. The original deal included $35.4 million of subordinated notes in the equity tranche.

ING Alternative Asset Management was in the primary market earlier in the year with the $412.85 million ING IM CLO 2014-1, Ltd./ING IM CLO 2014-1 LLC deal on Feb. 5.

New York City-based ING Alternative Asset Management is an affiliate of ING Investment Management Co. LLC.

Sankaty refinances CLO

Sankaty Advisors raised $362 million of notes due Dec. 15, 2022 in the Race Point V CLO refinancing, according to an informed source.

The CLO priced $251 million of class AR senior secured floating-rate notes at Libor plus 130 bps, 30 bps tighter than where the securities originally priced.

The CLO sold $47 million of class BR senior secured floating-rate notes at Libor plus 195 bps, 55 bps better than issuance.

The tranche of $28 million of class CR senior secured deferrable floating-rate notes priced at Libor plus 285 bps, tighter than where the tranche priced at Libor plus 350 bps in the original offering.

The CLO sold $19 million of class DR senior secured deferrable floating-rate notes at Libor plus 375 bps, 100 bps tighter than where the tranche first priced.

The $17 million offering of class ER senior secured deferrable floating-rate notes priced at Libor plus 600 bps, in 50 bps from the original issuance.

RBS Securities Inc. arranged the refinancing.

The original $405 million deal, which included a $43 million equity tranche of subordinated notes, priced in 2011.

Sankaty Advisors was in the primary market in 2013 with the $516.75 million Avery Point II CLO Ltd./Avery Point II CLO Corp. deal and the $514.16 million Avery Point III CLO Ltd./Avery Point III CLO Corp. transaction.

Boston-based Sankaty Advisors is the credit investment unit of Bain Capital LLC.

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