GoldenTree prices $807.25 million CLO; Ares also prices deal; secondary market tightens

By Rebecca Melvin

New York, Jan. 22 – Pricing emerged for two CLO deals as the holiday-shortened week got underway on Tuesday and secondary spreads were said to be in rally mode with AA through BB classes tighter by 10 to 15 basis points, according to market sources.

Financial markets in the United States were closed on Monday for Martin Luther King Jr. Day.

There is more room for secondary spreads tightening in the near term, according to the Bank of America CLO Research team.

In its weekly published on Monday, the Bank of America CLO Research team said that the secondary market was active this past week with almost $1 billion of bonds on the BWIC lists in for the bid. Supply was barbelled across the capital structure stack with most volume concentrated in AAA and BB tranches.

Spreads continued to move tighter as risk assets continued to recover. Tiering remained apparent for bonds from different managers. The research team also saw the emergence of more of a term curve with the front end seeing more tightening.

In the U.S. primary market, GoldenTree Asset Management LP priced $807.25 million of notes due April 24, 2031 in a new collateralized loan obligation deal, according to a market source.

The GoldenTree Loan Management US CLO 4 Ltd./GoldenTree Loan Management US CLO 4, LLC deal includes $5.75 million of class X floating-rate notes (/AAA/) at Libor plus 80 basis points; $476 million of class A floating-rate notes (/AAA/) at Libor plus 129 bps; $40 million of class A-J floating-rate notes at Libor plus 165 bps; $69.75 million of class B floating-rate notes (/AA/) at Libor plus 180 bps; $68 million of class C floating-rate notes (/A/) at Libor plus 270 bps; $46.25 million of class D floating-rate notes (/BBB-) at Libor plus 385 bps; $29 million of class E floating-rate notes (/BB-) at Libor plus 475 bps; $16.5 million of class F floating-rate notes (/BB-/) at Libor plus 640 bps and $56 million of subordinated notes.

In addition, Ares Management LLC priced $507.05 million of notes due April 15, 2031 in the new Ares LI CLO Ltd./Ares LI CLO LLC transaction, according to a market source.

The CLO primarily consists of broadly syndicated senior secured corporate loans.

The Rule 144A and Regulation S deal includes $295 million of class A-1 senior secured floating-rate notes (Aaa/AAA) to yield Libor plus 130 bps; $30 million of class A-2 senior secured floating-rate notes (Aaa/non-rated) to yield Libor plus 170 bps; $47.25 million of class B senior floating-rate notes (non-rated/AA) to yield Libor plus 195 bps; $33 million of class C mezzanine deferrable floating-rate notes (non-rated/A) to yield Libor plus 300 bps; $28.75 million of class D mezzanine deferrable floating-rate notes (non-rated/BBB-) to yield Libor plus 400 bps; $22.25 of class E mezzanine deferrable floating-rate notes (Ba3/BB) that were not yet priced and $50.8 million of subordinated notes.

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