Slow CLO supply eyed amid volatility; Neuberger Berman, CIFC, MidCap refinance notes

By Cristal Cody

Tupelo, Miss., March 6 – The CLO primary and refinancing markets stayed active over the week despite coronavirus-related volatility that hampered financial markets.

“U.S. CLO issuance has slowed slightly, but this week, CLO managers still priced a standard CLO, a middle market CLO, a static CLO, a CBO, and a refi,” Wells Fargo Securities, LLC analysts said in a research note on Friday. “We expect issuance to slow as wider CLO debt spreads pressure an already challenging new issue environment, and ‘print and sprint’ transactions are often difficult to execute.”

CLO spreads widened across the capital structure with AAAs an estimated 10 basis points wider on the week at the low Libor plus 130 bps area, according to the report.

Broadly syndicated A-rated tranches have widened about 60 bps to the Libor plus 260 bps area, while BBB spreads have eased 75 bps to the Libor plus 375 bps area and BB tranches have moved out 100 bps to the Libor plus 725 bps area.

Refinanced CLO AAA tranches also have widened about 10 bps to the Libor plus 110 bps area.

In pricing action, Neuberger Berman Loan Advisers LLC sold $437.75 million of notes in a refinancing of a 2017 broadly syndicated CLO.

CIFC Asset Management LLC priced $391 million of notes in a second refinancing of a 2015 broadly syndicated CLO.

In addition, MidCap Financial Services Capital Management LLC sold $467.47 million of notes in a refinancing of a 2017 middle-market CLO.

Elsewhere, leveraged loan funds saw a seventh straight week of outflows for the past week ended Wednesday, bringing year-to-date net outflows to $3.97 billion, according to a Fitch Ratings report on Friday.

Outflows jumped to $2.3 billion, compared to average weekly outflows of $407 million over the previous six weeks.

“This week’s tally was the largest outflow since the $2.3 billion of redemptions seen in the week ending Jan. 2, 2019,” Fitch said.

Neuberger Berman prices

Neuberger Berman Loan Advisers sold $437.75 million of notes due April 19, 2030 at par in the Neuberger Berman Loan Advisers CLO 24, Ltd./Neuberger Berman Loan Advisers CLO 24, LLC transaction, according to a market source and a notice of revised proposed first supplemental indenture.

The CLO priced $318.5 million of class A-R senior secured floating-rate notes at Libor plus 102 bps in the AAA-rated tranche.

Wells Fargo Securities, LLC was the refinancing placement agent.

The original $511.04 million CLO was issued May 11, 2017.

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

The Chicago-based firm is part of Neuberger Berman Group, LLC.

CIFC brings refinancing

CIFC Asset Management priced $391 million of notes in a second refinancing of the CIFC Funding 2015-II, Ltd./CIFC Funding 2015-II, LLC transaction, according to market sources.

The CLO sold $272 million of class A-R2 senior secured floating-rate notes at Libor plus 101 bps in the senior tranche.

BofA Securities, Inc. was the refinancing placement agent.

The maturity was extended to April 15, 2030 from April 15, 2027.

The original $513.4 million CLO was issued May 21, 2015 and was first refinanced Dec. 21, 2017.

The transaction is collateralized primarily by broadly syndicated first-lien senior secured corporate loans.

CIFC Asset Management is a New York City-based subsidiary of CIFC Corp.

MidCap prices CLO

MidCap Financial Services Capital Management priced $467.47 million of notes in the CLO middle-market refinancing and reset deal, sources said.

Woodmont 2017-3 LP/Woodmont 2017-3 GP/Woodmont 2017-3 LLC sold $280 million of class A-1R senior secured floating-rate notes at Libor plus 168 bps at the top of the capital stack.

Citigroup Global Markets Inc. was the refinancing placement agent.

The maturity was extended to April 20, 2032 from Oct. 18, 2029.

Woodmont 2017-3 originally issued $353,325,000 of notes on Sept. 7, 2017.

The CLO is backed primarily by middle-market senior secured loans.

The Bethesda, Md.-based firm is managed by Apollo Capital Management, LP, a subsidiary of Apollo Global Management LLC.

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