Risk retention in focus; Anchorage Capital, Feingold price; Covenant Credit sells CLO

By Cristal Cody

Tupelo, Miss., Nov. 6 – CLO pricing activity remains steady as market insiders continue to study the finalized risk retention rules for U.S. and European issuance, sources said on Thursday.

“Market participants are most focused on establishing a solution that allows managers to satisfy U.S. and EU risk retention,” Wells Fargo Securities, LLC senior analyst Dave Preston and associate analyst Jason McNeilis said in a note on Thursday.

“Currently, it appears that CLO managers and law firms are examining different CLO manager structures, to include the possibility of CLO equity investors working with CLO management teams to form CLO managers.”

Under the Dodd-Frank Act requirements, CLO managers must retain 5% capital of new deals beginning in 2016. U.S. CLOs brought before Oct. 21, 2016 will be grandfathered.

In new U.S. CLO primary activity, Anchorage Capital Group, LLC sold $522.5 million of notes due Nov. 15, 2026 in the Anchorage Capital CLO 5, Ltd./Anchorage Capital CLO 5, LLC offering, a source said.

Morgan Stanley & Co. LLC was the placement agent.

Also in the primary market, Feingold O’Keefe Capital, LLC sold $515 million of notes due Oct. 18, 2026 in the Hull Street CLO Ltd./Hull Street CLO LLC deal, according to a market source.

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

In other pricing action, Covenant Credit Partners LLC sold $525 million of notes due Oct. 19, 2026 in the firm’s second CLO deal, according to a market source.

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