June CLO issuance jumps; CIFC, Och-Ziff, Cerberus tap market; Covenant Credit plans CLO

By Cristal Cody

Tupelo, Miss., June 17 – More than $8 billion of CLOs have priced in June following new deals from Och-Ziff Loan Management, LP, CIFC Asset Management LLC and Cerberus Capital Management, LP, according to market sources.

“The average new-issue CLO size by month has increased by $125 [million] since February to $627 [million] in June, while AAA spreads have continued to tighten, which suggests improving demand technicals at the top of the structure,” J.P. Morgan Securities LLC analysts said in a note.

Och-Ziff Loan Management sold an upsized $824.75 million CLO and placed the AAA tranche at Libor plus 142 basis points, according to a market source.

CIFC Asset Management brought an upsized $723.15 million transaction, a market source said. The firm placed the CLO’s AAA notes at Libor plus 149 bps.

In the middle market, Cerberus Capital Management priced a $145 million short-dated CLO offering of loans, according to a source. The CLO priced two tranches of triple A-rated loans at Libor plus 250 bps and Libor plus 200 bps.

Looking ahead, primary activity is expected to stay strong through the rest of the month, sources said.

Covenant Credit Partners LLC plans to price $527.5 million of notes in the firm’s first CLO deal, according to a market source.

Marc Boatwright, who previously served as the senior portfolio manager of ING Investment Management’s senior loan group, joined Covenant Credit Partners in 2013 to launch the new credit investment platform.

The platform is a partnership between Covenant Credit Partners and Livermore Investments Group Ltd. “with the aim to manage CLOs and new loan funds in the future,” according to Livermore’s fiscal 2013 annual report.

Och-Ziff upsizes

Och-Ziff Loan Management sold an upsized $824.75 million of notes due July 17, 2026 in the OZLM VII, Ltd./OZLM VII, LLC transaction, according to a market source.

The CLO priced $310 million of class A-1A senior secured floating-rate notes (Aaa//AAA) at Libor plus 142 bps; $190 million of class A-1B senior secured floating-rate notes (Aaa//AAA) at Libor plus 149 bps; $66 million of class A-2A senior secured floating-rate notes (Aa2) at Libor plus 205 bps and $40 million of 4.249% class A-2B senior secured fixed-rate notes (Aa2).

Lower in the structure, the CLO sold $25 million of class B-1 deferrable floating-rate notes (A2) at Libor plus 285 bps; $21.75 million of 5.35% class B-2 deferrable fixed-rate notes (A2); $50 million of class C deferrable floating-rate notes (Baa3) at Libor plus 360 bps; $33.25 million of class D deferrable floating-rate notes (Ba2) at Libor plus 500 bps; $20.75 million of class E deferrable floating-rate notes (B2) at Libor plus 590 bps and $68 million of subordinated notes.

The deal was upsized from $619.79 million.

Deutsche Bank Securities Inc. was the placement agent.

Och-Ziff Loan Management will manage the CLO, which is backed primarily by first-lien senior secured loans.

Proceeds will be used to repay parties that provided interim financing and to purchase assets for a portfolio of senior secured leveraged loans.

Och-Ziff Loan Management was last in the primary market on March 7 with the $621.25 million OZLM VI CLO, Ltd./OZLM VI CLO, LLC transaction.

The firm, a subsidiary of New York City-based alternative asset management company Och-Ziff Capital Management Group LLC, brought three CLO deals in 2013.

CIFC prices CLO

CIFC Asset Management brought an upsized $723.15 million CLO deal, according to a market source.

CIFC Funding 2014-III Ltd./CIFC Funding 2014-III LLC priced $437.5 million of class A senior secured floating-rate notes (Aaa/AAA/) at Libor plus 149 bps.

The CLO also sold $43.5 million of class B-1 senior secured floating-rate notes (Aa2) at Libor plus 200 bps; $25 million of 4.21% class B-2 senior secured fixed-rate notes (Aa2); $55 million of class C-1 deferrable floating-rate notes (A2) at Libor plus 280 bps; $10 million of 5.43% class C-2 deferrable fixed-rate notes (A2); $42 million of class D deferrable floating-rate notes (Baa3) at Libor plus 340 bps; $32 million of class E deferrable floating-rate notes (Ba3) at Libor plus 475 bps and $78.15 million of subordinated notes.

The deal was upsized from $621.22 million.

BNP Paribas Securities Corp. was the placement agent.

CIFC Asset Management will manage the CLO, which is collateralized primarily by first-lien senior secured corporate loans.

The notes are due July 15, 2026.

The New York City-based investment adviser, a subsidiary of CIFC Corp., has priced three CLO deals in 2014.

Cerberus places CLO

Cerberus Capital Management priced a $145 million short-dated CLO, according to an informed source.

Cerberus AUS Levered II LP sold $35 million of class A-R loans (Aaa) at Libor plus 250 bps, $30 million of class A-T loans (Aaa) at Libor plus 200 bps and $80 million of limited partnership interests.

The loans are due June 17, 2022 and have a five-year weighted average life.

Natixis Securities Americas LLC was the underwriter.

Cerberus affiliate CAL II GP, LLC will manage the CLO.

The CLO is backed primarily by middle market first-lien senior secured loans and eligible investments.

Cerberus Capital Management is a New York City-based investment firm.

Covenant Credit plans deal

Covenant Credit Partners plans to price $527.5 million of notes due 2026 in the Covenant Credit Partners CLO I Ltd./Covenant Credit Partners CLO I LLC offering, according to a market source.

The deal includes $3.5 million of class X floating-rate notes (Aaa/AAA/); $305 million of class A floating-rate notes (Aaa/AAA/); $65 million of class B floating-rate notes (/AA/); $40 million of class C deferrable floating-rate notes (/A/); $26 million of class D deferrable floating-rate notes (/BBB/); $26.5 million of class E deferrable floating-rate notes (/BB-/) and $61.5 million of subordinated notes.

Morgan Stanley & Co. LLC is the placement agent.

Covenant Credit Partners will manage the CLO.

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

Covenant Credit Partners is an alternative credit investment management firm based in Charlotte, N.C.

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