Benefit Street prices $397 million CLO; Prima brings CRE CLO; July supply thin; AAAs wide

By Cristal Cody

Tupelo, Miss., July 17 – In new CLO pricing action, Benefit Street Partners LLC sold $397 million of notes in the manager’s second broadly syndicated offering of the year.

Meanwhile, the commercial real estate CLO market saw a new deal price from Prima Capital Advisors LLC, which sold $188.3 million of notes in the static transaction.

In other activity, CVC Credit Partners, LLC closed Friday on its previously reported $392.22 million Apidos CLO XXXIII/Apidos CLO XXXIII LLC offering. The CLO priced the $256 million class A tranche at Libor plus 170 basis points.

Also, Elmwood Asset Management LLC closed Friday on its new $392.4 million Elmwood CLO V Ltd. deal, which placed $239.5 million of class A-1 floating-rate notes at Libor plus 175 bps.

Broadly syndicated CLO volume has been light in July with over $1 billion of dollar-denominated issuance, according to a J.P. Morgan Securities LLC research note released Friday.

Year to date, about $37 billion of new dollar-denominated CLOs and more than €11 billion of euro-denominated CLOs have priced, according to the report.

In the same period a year ago, more than $66 billion of dollar-denominated new issue CLOs had priced, along with over €20 billion of euro-denominated CLO transactions, J.P. Morgan analysts said.

Meanwhile, dollar- and euro-denominated CLO AAA spreads “are too wide” compared to historical relationships with other assets such as investment-grade corporate bonds and CMBS AAA securities, Wells Fargo Securities, LLC analysts said in a research note on Friday.

Primary and secondary CLO AAA spreads were quoted Friday at a Libor plus 160 bps average.

Euro AAA tranches are at a Euribor plus 150 bps average in both the primary and secondary markets.

Further down the stack, dollar-denominated BBB tranches are averaging Libor plus 395 bps in the primary market and Libor plus 425 bps in the secondary market, according to the note.

Euro-denominated BBB tranches were quoted at an average Euribor plus 425 bps in new issuance and secondary trading.

“In the primary market, we still see strong demand at the top of the stack, while in lower mezzanine, we see signs that investors are less willing to push spreads tighter,” the Wells Fargo analysts said.

Looking at the dollar-denominated CLO secondary market, year-to-date Trace volume of $112 billion has already surpassed the full-year trading volume in 2019, according to the note.

“In June, the U.S. CLO secondary market saw the third most active month in history, with $18.8 billion in volume – trailing only March 2020’s record of $27.6 billion and June 2012,” Wells Fargo analysts said.

Secondary volume has slowed in July with only $5.2 billion in Trace volume month to date.

So far, nearly 75% of U.S. secondary volume has been investment-grade tranches – in line with 2019’s share but up from the roughly 50% of volume share seen in 2017 and 2018, according to the note.

Trading volume included $264.6 million of investment-grade CBO/CDO/CLO notes and $214.68 million of non-high-grade paper on Thursday, according to Trace data.

High-grade CBO/CDO/CLO paper improved to a 96.5 average from 93.2 on Wednesday.

Lower-rated issues climbed to 81.4 from 71.3 in the prior session.

Elsewhere, leverage loan funds saw a fifth consecutive week of outflows with $303 million of redemptions over the past week ended Wednesday, according to a Fitch Ratings report on Friday.

Outflows were up from $207 million of redemptions in the prior week. Year-to-date net outflows total $17.88 billion.

Benefit Street XXI prints

Benefit Street Partners priced $397 million of notes due July 15, 2031 in the broadly syndicated CLO offering, according to market sources.

Benefit Street Partners CLO XXI Ltd./Benefit Street Partners CLO XXI LLC sold $240 million of class A-1 floating-rate notes at Libor plus 170 bps at the top of the capital stack.

J.P. Morgan Securities LLC was the placement agent.

BSP CLO Management LLC is the CLO manager.

The notes are collateralized mostly by first-lien senior secured loans.

Benefit Street has priced two new CLOs and one refinancing transaction year to date.

New York City-based Benefit Street Partners is a credit investment subsidiary of Franklin Templeton Investments.

Prima Capital prices $188.3 million

Prima Capital Advisors sold $188.3 million of fixed-rate notes due Dec. 25, 2070 in the static CRE CLO deal, according to a market source.

Prima Capital CRE Securitization 2020-VIII Ltd. priced $84.8 million of 1.9% class CI.A notes in the senior tranche.

BofA Securities, Inc. was the underwriter.

The CRE CLO is collateralized by commercial mortgage bonds.

Prima Capital Advisors is an investment management firm based in Scarsdale, N.Y.

© 2015 Prospect News.
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