New issue CLO spreads tighten in 2017; high-grade securitized secondary trading thins

By Cristal Cody

Tupelo, Miss., Feb. 8 – New issue CLOs are pricing tighter in 2017, according to market sources.

In February, about $2.7 billion of new CLOs have priced month to date, bringing year-to-date issuance to about $3.6 billion, according to a market source.

Nearly $10 billion of U.S. CLOs have been refinanced year to date, with about $1.8 billion of volume in the first week of February.

New CLOs priced in February “confirm that the new issue market has tightened, with AAAs printing in a range of L+132 [basis points] to L+139 [bps],” J.P. Morgan Securities LLC analysts said in a note.

Sound Point Capital Management LP priced $664.3 million of notes in the new Sound Point CLO XV, Ltd. transaction on Feb. 2, bringing the $416 million class A tranche at Libor plus 139 bps.

THL Credit Advisors LLC priced $612 million of notes in the THL Credit Wind River 2017-1 CLO Ltd./THL Credit Wind River 2017-1 LLC deal on Feb. 2. The CLO sold $390 million of class A senior secured floating-rate notes at Libor plus 134 bps.

CLO AAA-rated notes priced in general in the Libor plus 141 bps to Libor plus 149 bps area in December, according to Prospect News data.

In other activity, secondary trading volume has been thin in the securitized high-grade securities market with $59.8 million of CBO/CDO/CLO issues traded on Tuesday and $19.65 million traded on Monday, Trace reported.

In the non-investment-grade secondary market, $106.7 million of securities were traded in the previous session compared to $79.2 million on Monday.

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