MJX sells $527.63 million CLO, year’s first new CLO; trading heavy; BB, B spreads widen

By Cristal Cody

Eureka Springs, Ark., Jan. 23 – MJX Asset Management LLC priced $527.63 million of notes in the Venture XXVI CLO, Ltd. offering, the first new CLO deal of 2017, according to details from a market source on Monday.

The transaction is expected to settle on Valentine’s Day.

The refinancing pace in 2017 has been stronger than the new deal pipeline. The CLO market has seen more than $5 billion of refinanced CLO transactions through mid-January, according to a BofA Merrill Lynch note.

Secondary trading also was strong in the U.S. market over the previous week.

“The U.S. secondary market has had the busiest week since the end of September 2016,” BofA Merrill Lynch analysts said in the note. “BWIC volume picked up to $1.1 [billion] this week, 80% of which were mezzanine and equity tranches. This week saw the highest weekly BWIC volume for double-B and single-B bonds over the last 12 months. Many fast money accounts were looking to monetize gains from the recent rally in mezzanine 2.0 CLOs.”

CLO BB and B spreads widened by 25 basis points due to the heavy supply, while spreads in the rest of the capital structure were flat on the week, according to the note.

BB-rated tranches were quoted at Libor plus 650 bps, while B tranches traded at Libor plus 925 bps. A-rated CLO spreads were flat over the past week at Libor plus 125 bps.

MJX prices Venture XXVI

MJX Asset Management priced $527.63 million of notes due Jan. 20, 2029 in the Venture XXVI CLO, according to a market source.

The CLO sold $336 million of class A senior secured floating-rate notes at par with a coupon of Libor plus 145 bps in the senior tranche.

Jefferies LLC was the placement agent.

MJX subsidiary MJX Venture Management LLC will manage the CLO, which is backed by a $500 million broadly syndicated first-lien senior secured corporate loan portfolio.

Proceeds from the transaction will be used to purchase a $500 million portfolio of mostly first-lien senior secured leveraged loans.

The New York City-based asset management firm priced three new CLO transactions and refinanced three CLOs in 2016.

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