CLO market welcomes victory over risk retention; Wellfleet refinances $370.81 million CLO

By Cristal Cody

Tupelo, Miss., May 11 – The CLO market celebrated a win Friday after the final deadline to appeal risk retention requirements passed on Thursday.

The 5% risk retention requirement for CLO managers under the Dodd-Frank Act was struck down following a lawsuit from the Loan Syndications and Trading Association.

“At midnight last night, the last opportunity for the government to file a petition for certiorari to the United States Supreme Court in its risk retention litigation with the LSTA expired, with the agencies choosing not to pursue further action,” LSTA said in a statement on Friday. “Thus ends a judicial process initiated by the LSTA on November 10, 2014, exactly three and a half years ago.

“This constitutes an important victory for the CLO market and we are delighted that this long journey has ended successfully.”

The U.S. Court of Appeals for the District of Columbia Circuit on Feb. 9 ruled in favor of the association’s suit against the Securities and Exchange Commission and the Federal Reserve Board, and the court granted summary judgment in favor of the association on April 5. The deadline to appeal was Thursday.

Elsewhere in pricing action, details emerged on Wellfleet Credit Partners, LLC’s $370.8 million refinancing of a 2016 CLO.

Wellfleet reprices notes

Wellfleet Credit Partners sold a total of $370,812,000 of notes due April 20, 2028 in the refinancing, according to a market source and a notice of executed first supplemental indenture on Thursday.

Wellfleet CLO 2016-1, Ltd./Wellfleet CLO 2016-1 LLC priced $260 million of the class A-R senior secured floating-rate notes at Libor plus 91 basis points.

Morgan Stanley & Co. LLC arranged the offering.

The original $358.5 million Wellfleet CLO 2016-1 transaction priced March 11, 2016 and sold $227.5 million of the class A floating-rate notes at Libor plus 175 bps.

Greenwich, Conn.-based Wellfleet Credit Partners is a performing credit arm created in 2015 by private investment firm Littlejohn & Co., LLC.

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