Steady CLO primary forecast through August; details emerge on $399.75 million Saranac CLO

By Cristal Cody

Tupelo, Miss., Aug. 11 – Steady primary action in the collateralized loan obligation market is expected throughout August following strong issuance over the summer, according to market sources on Monday.

New issuance is expected from Babson Capital Management LLC and BlueMountain Capital Management LLC, sources said.

Babson plans to bring $412 million of notes in the Babson CLO 2014-II Ltd. transaction via BofA Merrill Lynch, the asset manager’s first CLO offering since May.

BlueMountain Capital Management is underway in forming a new CLO deal after its most recent June transaction, according to an informed source.

Citigroup Global Markets Inc. is the placement agent.

The offering will be the New York City-based private investment firm’s third CLO transaction in 2014, in line with the firm’s 2013 primary activity, according to data compiled by Prospect News.

More than $88 billion of transactions have priced year to date in the U.S. and European markets.

Market analysts forecast total CLO issuance for the year at $100 billion to $120 billion.

In new CLO issuance, details emerged on Saranac Advisory Ltd.’s $399.75 million transaction priced via Jefferies LLC.

Saranac CLO III Ltd./Saranac CLO III LLC sold $164 million of AAA-rated floating-rate notes at Libor plus 148 basis points at the top of the capital structure, according to a market source.

The CLO also priced $74 million of class A-2A senior secured floating-rate notes at Libor plus 143 bps and $11 million of class A-2B senior secured floating-rate notes at Libor plus 170 bps.

The CLO placed $31 million of class B senior secured floating-rate notes at Libor plus 205 bps; $31 million of class C deferrable floating-rate notes at Libor plus 275 bps; $23 million of class D deferrable floating-rate notes at Libor plus 365 bps; $24.5 million of class E deferrable floating-rate notes at Libor plus 515 bps; $10 million of class F floating-rate notes at Libor plus 850 bps and $31.25 million of income notes.

Saranac Advisory, a Jersey Island firm founded in 2013, is the designated CLO manager. However, all management duties will be delegated to New York-based Canaras Capital Management, LLC.

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