CLO primary, secondary action stays light; NewStar set to close $400 million CLO

By Cristal Cody

Tupelo, Miss., Sept. 10 - Primary and secondary activity in the collateralized loan obligation market remains quiet for the week, while NewStar Financial, Inc. is set to close on Wednesday on its previously reported $400 million CLO, according to market sources.

"Not a thing," one source said of activity.

The action is expected to pick up with about $15 billion of new U.S. CLO transactions in the pipeline, sources report.

New CLOs likely to price in September include H.I.G. WhiteHorse Capital, LLC's $411.9 million WhiteHorse VII Ltd./WhiteHorse VII LLC transaction and Neuberger Berman Fixed Income LLC's $400 million deal, according to sources.

Secondary CLO activity remains minimal with AAA-rated spreads quoted in the Libor plus 120 basis points area, according to market sources.

NewStar set to close CLO

NewStar Financial, a Boston-based finance company that manages five CLOs with about $2.8 billion of assets under management, brought the offering of notes due Sept. 11, 2023 in August via Natixis Securities Americas LLC.

NewStar Commercial Loan Funding 2013-1 LLC priced $202.6 million of class A-T senior secured floating-rate notes (Aaa/AAA/) at Libor plus 165 bps and $35 million of class A-R senior secured floating-rate notes (Aaa/AAA/) at Libor plus 215 bps.

The CLO also sold $38 million of class B senior secured floating-rate notes (/AA/) at Libor plus 230 bps; $36 million of class C secured deferrable floating-rate notes (/A/) at Libor plus 380 bps; $21 million of class D secured deferrable floating-rate notes (/BBB/) at Libor plus 455 bps; $6 million of class E secured deferrable floating-rate notes (/BBB-) at Libor plus 530 bps; $17.4 million of class F secured deferrable floating-rate notes (/BB/) at Libor plus 550 bps; $15.2 million of class G secured deferrable floating-rate notes (/B/) at Libor plus 675 bps and $28.8 million in the equity tranche.

NewStar Financial will manage the CLO, which is backed primarily by first-lien senior secured small and medium enterprise and broadly syndicated loans.

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