Babson raises €409.8 million; TIAA CLO I prices; U.S. deals show ‘signs of tightening’

By Cristal Cody

Eureka Springs, Ark., June 8 – June primary action looks poised to stay on track with the volume seen over the past three months, with four new deals already priced in the U.S and European markets in the first week, according to market sources on Wednesday.

Babson Capital Management (UK) Ltd. priced €409.8 million in its first euro-denominated CLO offering of the year.

KKR Credit Advisors (Ireland) sold €462.8 million of notes due July 15, 2029 in the Avoca CLO XVI DAC deal, as previously reported, on Friday.

Details also emerged for Teachers Advisors Inc.’s new $455,545,000 debut CLO offering.

In other new U.S. issuance, Voya Alternative Asset Management LLC priced $407 million of notes in the Voya CLO 2016-2, Ltd. transaction via Citigroup Global Markets Inc., a source said. The deal has a five-year reinvestment period. Final pricing details were not available by press time.

Issuance is keeping “at the pace we have seen since March of roughly $5 billion a month,” Deutsche Bank Securities Inc. analyst Bjarni Torfason said in a note on Wednesday. “The Global ABS conference in Barcelona could slow things down next week but could push issuers to price their deals this week before the conference starts.”

In the U.S. primary market, pricings are “showing some signs of tightening at the more senior part of the capital stack,” with one deal achieving the tightest AAA print of the year at Libor plus 153 basis points, Torfason said.

Octagon Credit Investors, LLC priced the AAA-rated tranche in the Octagon Investment Partners 27, Ltd. transaction on May 25 at Libor plus 153 bps.

“However, pricing continues to be dispersed,” Torfason said. “Over the last three weeks or so we have seen AAA pricing ranging from L+153 to L+185 with spreads fairly uniformly distributed across that range.”

Babson prices €409.8 million

Babson Capital Management (UK) sold €409.8 million of notes due July 27, 2030 in the Babson Euro CLO 2016-1 BV deal, according to a market source.

Babson Euro CLO 2016-1 priced €228 million of class A1 floating-rate notes at Euribor plus 128 bps and €12 million of 1.52% class A2 fixed-rate notes at the top of the capital structure.

J.P. Morgan Securities plc arranged the offering.

Babson Capital Management (UK) will manage the CLO.

The deal is collateralized mainly by senior secured obligations.

Proceeds will be used to purchase a €400 million portfolio of European leveraged loans and bonds.

Babson priced one euro-denominated CLO in 2015.

The credit management firm is based in London.

Teachers Advisors sells CLO

Teachers Advisors priced $455,545,000 of notes due July 20, 2028 in the CLO deal, according to a market source.

TIAA CLO I Ltd./TIAA CLO I LLC sold $292.5 million of class A floating-rate notes (AAA) at a discount margin of 170 bps in the senior tranche.

Wells Fargo Securities, LLC was the placement agent.

Teachers Advisors will manage the CLO.

The CLO has a non-call period that ends July 20, 2018 and a reinvestment period scheduled to end July 20, 2020.

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

Teachers Advisors is an affiliate of New York-based TIAA Global Asset Management, which is part of the Teachers Insurance and Annuity Association of America.

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