CSAM improves spreads in $713 million second reprint; CLO AAA spreads firm; outflows up

By Cristal Cody

Tupelo, Miss., June 7 – Credit Suisse Asset Management, LLC tightened spreads across the CLO tranches it refinanced for a second time in a $713 million offering that closed on Thursday.

The spread on the AAA-rated tranche improved by more than 20 basis points from when it was first refinanced in 2016.

At the bottom of the stack, the tranche of class E-R-2 deferrable mezzanine floating-rate notes (BB-) priced at Libor plus 640 bps, compared to where it came at Libor plus 762 bps in the 2016 refinancing transaction.

CLO refinanced AAA-rated spreads printed about 1 bp better this week in the Libor plus 111 bps area, according to a Wells Fargo Securities, LLC research report on Friday.

New issue AAAs also priced in general about 1 bp tighter on the week in the Libor plus 129 bps area.

In the secondary market, broadly syndicated CLO spreads mostly softened from a week ago.

AAA spreads traded on average about 1 bp weaker over the week at the Libor plus 113 bps area.

Lower-rated tranches softened about 5 bps. BB spreads eased 5 bps on average from a week ago to the Libor plus 630 bps area, according to the report.

In other activity, leveraged loan outflows “accelerated” for the week ended Wednesday, Yuri Seliger, a credit strategist with BofA Securities, said in a global research note released on Friday.

Outflows climbed to $1.24 billion from $420 million in the previous week, according to the report that cited data from EPFR Global.

Fitch Ratings said in a note on Friday that outflows were seen for a 29th consecutive week for leveraged loan funds, noting a total of $1.47 billion had been withdrawn in the week ended Wednesday.

“This week’s tally is the second largest in 2019, behind the $2.3 billion of redemptions seen in the week ending Jan. 2,” Fitch said. “The 29-week total now stands at approximately $29 billion of outflows.”

The 29-week streak is the third longest of leveraged loan fund outflows since 2011, Fitch said.

CSAM reprints CLO

Credit Suisse Asset Management priced a $713 million second refinancing of notes in the vintage 2012 Madison Park Funding X Ltd./Madison Park Funding X LLC collateralized loan obligation deal, according to a market source and a notice of executed third supplemental indenture on Friday.

The CLO priced $488.25 million of the AAA-rated class A-R-2 senior secured floating-rate notes at Libor plus 122 bps.

BofA Securities, Inc. was the refinancing placement agent.

The notes are due Jan. 20, 2029.

The CLO was originally issued Dec. 18, 2012 and was first refinanced on Oct. 27, 2016.

In the initial $713 million refinancing, the CLO sold $488.25 million of class A-R senior secured floating-rate notes at Libor plus 145 bps.

Proceeds were used to redeem the first refinanced notes. The original $85 million equity tranche of subordinated notes remains outstanding.

Madison Park Funding X is collateralized primarily by broadly syndicated senior secured corporate loans.

The CLO manager has priced four new dollar-denominated CLOs and refinanced two vintage CLOs year to date.

Credit Suisse Asset Management is a unit of Credit Suisse Group AG.

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