Oaktree, Loomis Sayles, Seix CLOs price; secondary thin; mezzanine spreads edge tighter

By Cristal Cody

Tupelo, Miss., Aug. 10 – New primary action in the CLO market includes deals from Oaktree Capital Management LP, Loomis, Sayles & Co., LP and Seix Investment Advisors LLC, while secondary activity remained quiet.

Oaktree Capital Management was in the primary market with a $511.75 million CLO transaction.

Loomis, Sayles & Co. brought a $412.7 million deal, the firm’s first CLO offering since 2006.

Seix Investment Advisors placed $415.6 million of notes in its CLO deal.

Issuance may remain light over August while market participants wait to see if the Federal Reserve hikes interest rates at the September policy meeting, according to market sources.

“Among other things, the Fed guessing game probably means that CLO activity will remain light until later in September,” according to a J.P. Morgan Securities LLC market note.

In the U.S. CLO secondary market, activity has been fairly quiet with less than $300 million of BWIC volumes up for bid over the previous week, according to BofA Merrill Lynch.

“The market tone has not changed much over the past few weeks,” BofA Merrill Lynch analysts said in a note. “Junior mezzanine tranches continue to trade in a wide range. There was not much offered in equity and higher portfolio commodity concentrations continue to be scrutinized by investors.”

Secondary CLO mezzanine spreads are edging tighter, according to the J.P. Morgan Securities note.

“Tier 1 U.S. BBB 2.0 has traded in BWICs inside 400 [basis points] and down to 385 [bps],” J.P. Morgan Securities analysts said.

In the European CLO secondary market, volume also has been light with about €45 billion of bonds on BWIC lists in the previous week, according to the BofA Merrill Lynch note.

“These generally traded well, with BBB and BB bonds tightening by around 10 bps in our estimation,” the BofA Merrill Lynch analysts said. “We also observed a rare large block of an AAA bond from a non-risk retention compliant 2.0 deal trade at around 170 bps. For comparison, we estimate that 2.0 AAA spreads for compliant deals are currently around 135-145 bps.”

Oaktree raises $511.8 million

Oaktree Capital Management sold $511.75 million of notes due Oct. 20, 2027 in the Oaktree CLO 2015-1 Ltd./Oaktree CLO 2015-1 LLC transaction, according to a market source.

The CLO priced $310 million of class A-1 floating-rate notes at Libor plus 155 bps in the senior tranche.

BofA Merrill Lynch arranged the deal.

Oaktree Capital Management will manage the CLO.

The deal is backed mainly by broadly syndicated senior secured corporate loans.

Oaktree Capital Management has priced two CLO vehicles in 2015.

The Los Angeles-based asset management firm, a subsidiary of Oaktree Capital Group, LLC, was in the U.S. market in 2014 with four CLO transactions.

Loomis, Sayles taps market

Loomis, Sayles & Co. sold a $412.7 million CLO offering of notes due July 20, 2027 in six tranches, according to a market source.

At the top of the capital stack, Loomis Sayles CLO II, Ltd./Loomis Sayles CLO II, LLC priced $254 million of class A-1 floating-rate notes at Libor plus 153 bps.

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

Loomis, Sayles & Co. will manage the CLO.

The transaction is backed primarily by first-lien senior secured corporate loans.

Proceeds from the deal will be used to purchase a portfolio of about $400 million of leveraged loans.

Loomis, Sayles & Co. was last in the CLO primary market in 2006 with the Loomis Sayles CLO I, Ltd. transaction.

The investment management firm is based in Boston.

Seix raises $415.6 million

Seix Investment Advisors priced a $415.6 million CLO offering, according to a market source.

Mountain View CLO X, Ltd./Mountain View CLO X, LLC sold $200 million of class A-1 floating-rate notes at Libor plus 150 bps in the AAA-rated tranche.

Morgan Stanley & Co. LLC was the placement agent.

Seix Investment Advisors will manage the CLO.

The notes are due Sept. 13, 2027.

The deal is backed primarily by broadly syndicated senior secured corporate loans.

Seix Investment Managers has priced two CLO deals year to date.

The Upper Saddle River, N.J.-based firm priced one CLO in 2013 and one CLO in 2014.

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