York prices; new CLOs among mix of lenders likely to refinance middle-market loans

By Cristal Cody

Eureka Springs, Ark., May 19 – Details emerged about a new CLO deal brought by York CLO Managed Holdings, LLC.

York CLO Managed Holdings priced a $403.2 million CLO in its first deal of the year and third total offering in the space.

In other market activity, Moody’s Investors Service said in a May CLO market report that it expects new CLOs, private equity firms and hedge funds and banks to play a larger role in financing middle market companies as the bulk of middle market loans mature from 2016 through 2020.

“This new refinancing mix of lenders will be more representative of the mix that was in place prior to 2007, before business development companies became the predominant MM lender,” Moody’s said. “However, we expect BDCs and existing CLOs to reduce the MM loan maturity wave somewhat in the coming years, as they have in the past, by renegotiating and restructuring some MM loans prior to maturity.”

By 2020, about $28 billion of middle-market loan investments held by BDCs, along with $20 billion of loans in CLO portfolios that will mature after their deals' reinvestment periods end, will mature and need to be refinanced, according to the report.

“PE firms and hedge funds, new CLOs and banks will likely refinance MM loans as BDCs scale back,” Moody’s said. “PE firms and hedge funds will not likely have the capacity to refinance the entire MM maturity wave and we expect new CLOs, banks and specialty finance companies refinancing most of what they cannot.”

York CLO prices

York CLO Managed Holdings priced $403.2 million of notes due July 20, 2025 in the York CLO-3 Ltd./York CLO-3 LLC offering, according to a market source.

The CLO sold $268 million of class A floating-rate notes at Libor plus 157 basis points at the top of the capital stack.

Morgan Stanley & Co. LLC was the underwriter.

The CLO has a one-year non-call period and a two-year reinvestment period.

The transaction is backed primarily by senior secured loans.

York priced one CLO deal in 2014 and in 2015.

The New York City-based firm is a subsidiary of York Capital Management Global Advisors, LLC.

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