Pipeline fills; GSO/Blackstone preps CLO; Sound Point prices AAAs at Libor plus 157 bps

By Cristal Cody

Tupelo, Miss., April 1 - GSO Capital Partners LP is expected to be in the primary market with the $510.32 million Pinnacle Park CLO Ltd./Pinnacle Park CLO LLC deal, according to an informed source on Tuesday.

More than $15 billion of CLO transactions are in the pipeline, according to a market source.

"After a slow start to 2014, the CLO primary market has largely re-opened, with $22 billion of issuance in Q1," Wells Fargo Securities, LLC senior analyst Dave Preston and associate analyst Jason McNeilis said in a note on Tuesday. "We believe that the active primary market is largely based on expectations for a Volcker solution in the near term. Most CLO-specific regulations should be finalized by H2 2014."

The Volcker Rule currently prohibits banks from owning CLOs that hold bonds.

Elsewhere, details emerged on Sound Point Capital Management LP's $628 million CLO deal, which placed the AAA-rated tranche at Libor plus 157 basis points, slightly wider compared to recent issuance in the Libor plus 150 bps to Libor plus 155 bps area, according to market sources.

GSO/Blackstone CLO on tap

GSO Capital Partners plans to offer $510.32 million of notes due 2026 in the Pinnacle Park CLO deal, according to an informed source.

The deal includes $307.5 million of class A floating-rate notes (//AAA); $63.75 million of class B floating-rate notes; $28,125,000 of class C floating-rate notes; $31.25 million of class D floating-rate notes; $29,375,000 of class E floating-rate notes; $5,938,000 of class F floating-rate notes and $44,385,000 of subordinated notes.

Wells Fargo Securities LLC is the placement agent.

GSO/Blackstone Debt Funds Management LLC will manage the CLO, which is backed primarily by first-lien senior secured loans.

The proceeds will be used to purchase a $500 million portfolio of primarily senior secured leveraged loans.

GSO Capital Partners was in the U.S. CLO primary market in 2013 with the $413.35 million Keuka Park CLO, Ltd./Keuka Park CLO, LLC offering and the $515.95 million Tryon Park CLO, Ltd./Tryon Park CLO Corp. deal.

The New York City-based asset management firm is an affiliate of the Blackstone Group LP.

Sound Point Capital prices

Sound Point Capital Management sold $628 million of notes due April 21, 2026 in the Sound Point CLO V offering, according to an informed source.

The CLO priced $4 million of class X senior secured floating-rate notes (Aaa//AAA) at Libor plus 100 bps; $390 million of class A senior secured floating-rate notes (Aaa//AAA) at Libor plus 157 bps; $37 million of class B-1 senior secured floating-rate notes (Aa2) at Libor plus 190 bps; $30 million of 4.28% class B-2 senior secured fixed-rate notes (Aa2); $32.5 million of class C mezzanine secured deferrable floating-rate notes (A2) at Libor plus 275 bps; $35.5 million of class D mezzanine secured deferrable floating-rate notes (Baa3) at Libor plus 340 bps; $27 million of class E junior secured deferrable floating-rate notes (Ba3) at Libor plus 425 bps; $16 million of class F junior secured deferrable floating-rate notes (B2) at Libor plus 470 bps and $56 million of subordinated notes.

Morgan Stanley & Co. LLC arranged the offering.

Sound Point Capital Management will manage the CLO, which is backed primarily by broadly syndicated first-lien senior secured corporate loans.

Proceeds will be used to purchase a $600 million portfolio of primarily leveraged loans.

In 2013, the firm sold the $400 million Sound Point CLO II Ltd./Sound Point CLO II LLC transaction, the $420.75 million Sound Point CLO III, Ltd. offering and the $635.3 million Sound Point CLO IV Ltd./Sound Point CLO IV LLC deal.

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