Blackstone/GSO in market; BlackRock preps CLO; global CLO performance forecast strong

By Cristal Cody

Tupelo, Miss., Dec. 2 – CLO primary activity remains steady, with one new U.S. deal added to the pipeline and another expected to price in the European market, according to market sources on Wednesday.

Blackstone/GSO Debt Funds Management Europe Ltd. was expected to price €414 million of notes in the Tymon Park CLO Ltd. transaction via BofA Merrill Lynch, a source said. Final pricing details were not available by press time.

Coming up in the U.S. primary market, BlackRock Financial Management, Inc. is marketing $506.5 million of notes in the firm’s fourth CLO deal of the year.

CLO credit performance is expected to remain strong in 2016, Moody’s Investors Service said in a news release on Wednesday.

“U.S. CLOs will perform well next year, with loan defaults rising slightly but remaining low overall due to tighter underwriting standards,” Moody’s senior vice president Algis Remeza said in the release. “And most European transactions will be able to absorb an increase in defaults due to embedded structural protections, despite declining underwriting standards in that region.”

BlackRock plans fourth deal

BlackRock Financial Management intends to price $506.5 million of notes in the Magnetite XVI, Ltd./Magnetite XVI LLC CLO offering, according to a market source.

The deal is expected to include $320 million of class A floating-rate notes (//AAA); $60 million of class B floating-rate notes; $11,579,000 of class C-1 floating-rate notes; $18,171,000 of class C-2 floating-rate notes; $25.25 million of class D floating-rate notes; $25 million of class E floating-rate notes and $46.5 million of subordinated notes.

Credit Suisse Securities (USA) LLC will arrange the offering.

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

Proceeds from the deal will be used to purchase a portfolio of about $500 million of mostly senior secured leveraged loans.

BlackRock Financial Management was previously in the CLO primary market on Oct. 20 with the Magnetite XV, Ltd./Magnetite XV LLC transaction.

The CLO manager has priced three new CLOs and refinanced one vintage 2012 CLO year to date.

The New York City-based investment management firm placed three CLO deals in 2014.

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