Chenavari taps Europe; KKR prices $410.75 million CLO; secondary active; A, BBB notes firm

By Cristal Cody

Eureka Springs, Ark., Aug. 12 – CLO primary action picked up in the U.S. and European markets over the week, according to sources on Friday.

Chenavari Credit Partners LLP priced a €362.8 million euro-denominated deal.

KKR Financial Advisors II, LLC priced $410.75 million in a new CLO transaction.

U.S. CLO volume totals $34.83 billion year to date, according to Prospect News data.

In the euro-denominated market, €10.3 billion of CLOs have priced year to date.

“Six deals have priced thus far in August, one of which was a middle-market CLO,” Wells Fargo Securities, LLC analysts said in a note on Friday.

Secondary market activity continues to remain strong in August.

“In secondary, the market saw nearly $1 billion in Bid Wanted In Competition volume this week,” the Wells Fargo analysts said.

“Since early July, secondary single-A and BBB spreads have tightened 50 [basis points]-60 bps,” the analysts said. “The top and the bottom of the stack have been the slowest to tighten; AAA spreads are gradually grinding tighter, but are only 5-8 bps tighter since early July. BB spreads have proven the most resistant to the rally. Spreads are approximately 75-100 bps tighter since early July – but much of tightening was in the two weeks after the Brexit vote.”

CLO 2.0 AAA-rated tranches traded 5 bps better from a month ago at Libor plus 145 bps, according to a separate Wells Fargo Securities report.

BBs traded 50 bps tighter on the month at Libor plus 775 bps.

In the European CLO secondary market, 2.0 euro AAAs traded 12 bps tighter from a month ago at Euribor plus 125 bps, while BBs improved 40 bps on the month at Euribor plus 710 bps.

On Thursday, 42 investment-grade CBO/CDO/CLO issues totaling $223.68 million and 32 non-investment-grade CBO/CDO/CLO securities totaling $91.07 million were traded, according to Trace.

During Wednesday’s session, 44 investment-grade CBO/CDO/CLO issues totaling $353.23 million and 47 non-investment-grade CBO/CDO/CLO securities totaling $148.97 million were traded.

Tuesday’s trading session included 30 high-grade CBO/CDO/CLO issues totaling $247.8 million and 44 non-investment-grade securities totaling $269.9 million.

Secondary volume on Monday totaled $70.8 million from 18 investment-grade issues and $86.8 million from 22 non-investment-grade securities.

Chenavari prices CLO

Chenavari Credit Partners sold €362.8 million of notes due 2028 in the Toro European CLO 2 DAC transaction, according to a market source on Friday.

The CLO priced €212.3 million of class A senior secured floating-rate notes at Euribor plus 126 bps in the senior tranche.

Citigroup Global Markets Ltd. arranged the offering.

The notes are backed primarily by euro-denominated senior secured loans and bonds.

Proceeds will be used to purchase a €350 million portfolio of mostly European leveraged loans and bonds.

Chenavari Credit Partners is part of London-based Chenavari Financial Group Ltd.

KKR prices $410.75 million

KKR Financial Advisors II priced $410.75 million of notes due Oct. 18, 2028 in the KKR CLO 15 Ltd./KKR CLO 15 LLC deal, according to a market source on Friday.

KKR CLO 15 sold $206 million of class A-1A senior secured floating-rate notes at Libor plus 156 bps at the top of the capital stack.

Credit Suisse Securities (USA) LLC was the placement agent.

The deal is collateralized primarily by broadly syndicated first-lien senior secured loans.

Proceeds will be used to purchase a portfolio of $400 million of mostly first-lien senior secured loans.

KKR has priced two new U.S. CLOs and refinanced one vintage U.S. CLO transaction year to date.

The investment firm, an affiliate of Kohlberg Kravis Roberts & Co. LP, brought three new U.S. CLO transactions to market in 2015.

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