June strong month for volume; Guggenheim prints second CLO; Benefit Street Partners prices

By Cristal Cody

Eureka Springs, Ark., June 29 – CLO primary action has slowed in the days following Brexit, but volume has been strong over June.

The month has seen about $6.14 billion of CLO volume to date and is closing out with the largest monthly issuance this year, according to a Deutsche Bank Securities Inc. note released on Wednesday.

Details emerged for Guggenheim Partners Investment Management LLC’s second CLO offering in June. The CLO manager priced a $404.99 million transaction in tandem with its $401.45 million Seven Sticks 2016-1 CLO Ltd. deal on June 15.

Benefit Street Partners LLC also tapped the CLO primary market for the first time this year with a $404.4 million deal.

Spreads have begun to stabilize in the CLO markets following two sessions of weakness after Britain voted to exit the European Union, Deutsche Bank Securities analyst Bjarni Torfason said in the note.

“CLO spreads widened in the secondary market on Friday and Monday,” he said. “The widening mainly took place in junior mezz but also affected the most senior tranche. If Tuesday’s rebound in markets more broadly holds ground, then we should see some of the widening reverse. We are still to see how primary market spreads react as no deal has priced since the referendum.”

Guggenheim prices CLO

Guggenheim Partners Investment Management priced $404.99 million of notes due April 15, 2028 in the 1828 2016-1 CLO Ltd./1828 CLO LLC transaction, a market source said.

The CLO sold $221.9 million of class A-1S floating-rate notes at Libor plus 160 basis points in the senior slice.

GreensLedge Capital Markets LLC was the placement agent.

Guggenheim will manage the CLO, which has a two-year non-call period and a four-year reinvestment period.

Proceeds will be used to purchase a portfolio of about $400 million of mostly senior secured leveraged loans.

The CLO manager also priced the $401.45 million Seven Sticks 2016-1 CLO Ltd. deal on June 15.

The Santa Monica, Calif.-based investment management firm and subsidiary of Guggenheim Partners, LLC priced five CLO transactions in 2015.

Benefit Street taps market

Benefit Street Partners priced a $404.4 million CLO deal via Morgan Stanley & Co. LLC, according to a market source.

Benefit Street Partners CLO IX, Ltd. sold $204 million of class A floating-rate notes at Libor plus 161 bps in the AAA-rated tranche.

The notes are due July 20, 2028.

The CLO is non-callable until July 20, 2018. The reinvestment period ends July 20, 2020.

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

The deal is Benefit Street Partners’ first CLO transaction in 2016.

The New York City-based credit affiliate of Providence Equity Partners LLC priced three new CLO deals and refinanced one vintage CLO transaction in 2015.

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