Octagon Credit, CBAM, Napier Park price CLOs; heavy July supply weighs on spreads

By Cristal Cody

Tupelo, Miss., July 16 – CLO issuance remains solid with several new deals pricing in July, according to market sources on Monday.

Octagon Credit Investors, LLC brought a $664 million CLO to the primary market on Thursday.

CBAM CLO Management LLC closed Thursday on a new $756 million CLO.

Also, Napier Park Global Capital (US) LP priced $602.1 million of notes in a new deal.

CLO refinancing and reset activity also has been strong, sources report.

The “heavy July supply calendar” weighed on spreads last week, while other securities tightened, according to a BofA Merrill Lynch note released on Monday.

After a soft first half of the year for corporate credit spreads, “buyers have the upper hand when it comes to gaining spread concessions on new issues/refis/resets, which could see another $25-$30 billion in July,” BofA Merrill Lynch analysts said in the note. “This naturally will spill over to the secondary market.”

BWIC volume in the secondary market came to more than $400 million over the past week with spreads widening, the analysts said.

AAA spreads ended Friday at the Libor plus 112 basis points area, about 2 bps wider on the week.

Octagon places $664 million

Octagon Credit Investors sold $664 million of notes due July 20, 2030 in the Octagon Investment Partners 38, Ltd./Octagon Investment Partners 38, LLC transaction on Thursday, according to a market source.

The deal was downsized from an initial $765.7 million offering. Final pricing details were not immediately available.

BofA Merrill Lynch was the placement agent.

The notes are backed primarily by broadly syndicated senior secured corporate loans.

Octagon Credit Investors has priced four new CLOs year to date.

In 2017, the CLO manager sold four new CLOs.

The New York-based credit investment firm is a subsidiary of Conning & Co.

CBAM closes $756 million CLO

CBAM CLO Management priced and closed on $756 million of notes due July 2031 in the new deal, according to a market source and a company news release.

CBAM 2018-7, Ltd./CBAM 2018-7 LLC sold $480 million of class A floating-rate notes at Libor plus 110 bps in the senior tranche.

BofA Merrill Lynch was the lead arranger.

The latest deal brings the CLO manger’s total CLO issuance to $7.9 billion since the close of its first CLO in June 2017, according to the release. As of July, CBAM said it was the second largest issuer of new CLOs in 2018 at $2.8 billion. In 2017, CBAM was the largest U.S. issuer of new CLOs at $5.1 billion.

The New York City-based portfolio company of private investment firm Eldridge Industries placed three $1 billion-plus CLO transactions in 2017.

Napier Park prices CLO

Napier Park Global Capital (US) priced $602.1 million of notes due July 15, 2031 in the Regatta XIII Funding Ltd./Regatta XIII Funding LLC offering, according to a market source.

Regatta XIII Funding sold the $367.5 million of class A-1 floating-rate notes at Libor plus 112 bps.

Citigroup Global Markets Inc. arranged the deal.

The CLO is backed primarily by broadly syndicated first-lien senior secured loans.

The asset management firm is based in New York.

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