Wellfleet taps market; Alcentra brings $442.7 million CLO; deal volume thin; spreads widen

By Cristal Cody

Tupelo, Miss., Aug. 31 – Littlejohn & Co., LLC’s Wellfleet Credit Partners, LLC brought a debut $360 million CLO deal and priced the AAA-rated tranche at Libor plus 165 basis points, on the wide side of recent issuance.

Final pricing details also emerged for Alcentra NY LLC’s previously reported $442.7 million CLO deal, which was downsized from an expected $514.45 million.

U.S. CLO volume ended August with about $6.5 billion priced in 13 deals, according to Prospect News data.

The month saw four consecutive weeks “with less than $2 billion” of issuance, J.P. Morgan Securities LLC analysts said in a market note.

U.S. AAAs continue to price on average in the Libor plus 144 bps to Libor plus 158 bps area, while European AAA issuance has remained in the Euribor plus 135 bps area.

In the U.S. secondary market, activity stayed light with less than $220 million of BWIC volumes over the previous week, according to BofA Merrill Lynch.

About half of the bonds traded were rated AAA, and senior spreads widened by 8 bps to 10 bps, “while mezzanine levels pushed out by 20-25 [bps],” BofA Merrill Lynch analysts said in a note. “About 20% of the 2.0/3.0 line items were reported to not have traded.”

In the European CLO secondary market, about €130 million of euro-denominated BWIC volume was seen over the previous week with the bulk concentrated in AAA and AA bonds, according to BofA Merrill Lynch.

“We estimate spreads widened around 5-10 bps for this part of the capital structure in 2.0 CLOs,” the analysts said. “Generally we have seen very little selling of mezzanine bonds in recent weeks and therefore limited price transparency in this part of the market. As is normal for the time of year, supply has been low in recent weeks, with no new deals pricing in August, and very little appearing on BWIC lists in the secondary market.”

Wellfleet debuts CLO

In the primary market, Wellfleet Credit Partners brought a debut $360 million CLO deal, a source said.

Wellfleet CLO 2015-1, LLC priced $215 million of class A-1 floating-rate notes (Aaa expected/AAA expected) at Libor plus 165 bps in the senior slice.

Morgan Stanley & Co. LLC was the placement agent.

Wellfleet Credit Partners will manage the broadly syndicated CLO.

The firm was formed earlier in the year by Greenwich, Conn.-based private equity firm Littlejohn & Co.

Alcentra downsizes

Alcentra sold $442.7 million of notes due Oct. 20, 2027 in its CLO deal, according to a market source.

Shackleton 2015-VIII CLO, Ltd./Shackleton 2015-VIII CLO, LLC priced $246.15 million of class A-1 senior secured floating-rate notes (Aaa/AAA) at Libor plus 151 bps at the top of the capital structure.

JPMorgan was the placement agent.

Alcentra will manage the CLO.

The CLO is non-callable until Oct. 20, 2017. The reinvestment period ends Oct. 20, 2019.

The transaction is backed primarily by broadly syndicated senior secured corporate loans.

Alcentra previously was in the primary market with the $508 million Shackleton 2015-VII CLO, Ltd./Shackleton 2015-VII CLO, LLC deal on March 27.

New York-based Alcentra, part of BNY Alcentra Group Holdings, Inc., priced two U.S. CLO transactions in 2014.

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