May CLO volume thin; Triumph, Black Diamond bring deals; CLOs trim exposure to commodities

By Cristal Cody

Eureka Springs, Ark., May 4 – May is starting off light in CLO primary activity but is expected to pick up following strong issuance in April.

“After a slow start to the month, April issuance managed to outdo March as the largest issuance month so far this year,” Deutsche Bank Securities LLC analyst Bjarni Torfason said in a note on Wednesday. “A spurt of issuance last week of six deals, worth $2.5 billion, brought the month’s issuance to $5.3 billion.”

Triumph Capital Advisors, LLC affiliate Trinitas Capital Management LLC priced $407 million of notes due 2028 in the Trinitas CLO IV Ltd./Trinitas CLO IV LLC offering on Monday, a source said. Wells Fargo Securities, LLC was the placement agent. Final pricing details were not available by press time.

In addition, Black Diamond Capital Management, LLC brought to market a $360 million deal via J.P. Morgan Securities LLC. Final pricing details for the Black Diamond CLO 2016-1, Ltd. offering were not available by press time.

New CLO deals are increasing exposure to health care and tech while avoiding commodities, Torfason noted.

“The commodities sectors are still responsible for most of ‘unrealized losses’ in CLO collateral,” he said. “Health care, high tech and finance have consistently been the three largest sectors and increased as share of collateral in CLOs last year.”

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