GoldenTree wraps $709.8 million CLO; heavy new issue and refinancing supply forecast

By Cristal Cody

Tupelo, Miss., May 25 – New issue and refinancing action remains strong in the CLO markets with heavy deal action expected in the summer, according to market sources on Friday.

In new issuance, GoldenTree Loan Management LP closed Thursday on a new $709.8 million CLO.

The transaction is the manager’s first new CLO of 2018.

Looking ahead, strong supply is expected in July, Wells Fargo Securities, LLC analysts said in a note on Friday following an industry conference in New York.

“Issuers and investors all expect heavy supply in July, due to refi/reset activity as well as a busy primary calendar,” the analysts said.

The strong volume also may pressure spreads with CLO tranches anticipated to begin widening in July, according to the note.

“CLO managers expressed concerns over collateral supply, while also noting ambitious plans for issuing primary CLOs and resetting older vintage CLOs in 2018,” the analysts said. “From savvier CLO veterans, we saw increased interest in new/alternative structures to plain vanilla CLOs, such as CBOs, middle market CLOs and static deals.”

More than $43 billion of new dollar-denominated CLOs have priced year to date, while more than $51 billion of vintage U.S. CLOs have been refinanced and/or reset so far in 2018, sources report.

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