Trinitas refinances $351 million CLO notes; ruling fuels expectations for more supply

By Cristal Cody

Tupelo, Miss., Feb. 23 – Trinitas Capital Management, LLC refinanced $351 million of notes from a 2015 CLO in an offering that closed on Friday.

New issue and refinancing action is expected to increase after April if no appeals are filed against the U.S. Court of Appeals for the District of Columbia’s ruling earlier in the month that removes risk retention requirements for CLO managers.

“While this may not be a game changer in and of itself, it creates a potential for upside to CLO issuance in a year where the CLO machine is already expected to be very active,” BofA Merrill Lynch credit strategists Oleg Melentyev and Neha Khoda said in a note released on Friday.

The ruling prompted Morgan Stanley & Co. LLC analysts to raise their new issue CLO supply forecast for 2018 by $10 billion to $110 billion.

In its deal, Trinitas Capital Management priced $351 million of notes due July 15, 2027 in the CLO refinancing, according to a market source.

Trinitas CLO III Ltd./Trinitas CLO III LLC sold $251.5 million of class A-R floating-rate notes at Libor plus 80 basis points in the senior tranche.

Nomura Securities International, Inc. was the refinancing placement agent.

The original $409.38 million transaction was issued June 9, 2015.

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