MJX Asset refinances three of four; Bain reprices four classes; secondary trading busier

Chicago, Aug. 30 – The collateralized loan obligation market witnessed two refinancings on Friday, if not any pure new issues.

MJX Asset Management LLC refinanced three classes of its Venture XXIV CLO, Ltd./Venture XXIV CLO, LLC notes for $375.5 million.

And, Bain Capital Credit Advisors, LP refinanced four classes of its Bain Capital Credit CLO 2016-2 Ltd. notes for $462 million.

Secondary trading was much more active on Thursday than it has been for the entire week, according to Trace data.

Investment-grade trades in the CBO/CDO/CLO market totaled $398.83 million, more than double what it was on Wednesday. The average price was 98.7 with more customers selling than buying, a reversal from trading days earlier in the week. Customers sold $310.5 million of that total and bought $86.34 million.

Non-investment grade trading was also significantly higher at $84.18 million, four times higher than it was on Wednesday. Customers also sold more than they bought. The average price was 81.4.

MJX prices three classes

MJX Asset Management opted to refinance three of the four classes of notes that had been announced a couple of weeks ago in their Venture XXIV portfolio.

The class B notes were held back from the refinancing.

The reset notes have an extended non-call period, which ends in April 2020.

Bain sells $426 million

Bain refinanced four of the six classes of notes in its 2016-2 portfolio.

The portfolio must consist of at least 92.5% of first-lien senior secured loans and up to 7.5% can be second-lien or unsecured loans.

Other changes to the portfolio included changes to certain collateral quality tests, changes to the base management fee and the subordinated interest fee, according to Moody’s.

Libor fallback language

Preparation for the transition away from Libor continues to be something the CLO market is going to have to look soon.

To date, Fitch Ratings has rated five CLOs that have adopted fallback language: Trinitas CLO XI, Ltd., HPS Loan Management 15-2019, Ltd., OZLM XXIV, Ltd., Anchorage Capital CLO 11, Ltd. and Sound Point CLO XIV, Ltd.

In a press release on Friday, Fitch noted that “regulatory pressure is likely to be needed for widespread adoption.”

In the release Fitch detailed ways in which the five CLOs that adopted fallback language complied with recommendations and variances away from those recommendations.

For instance, each of the five included most of the triggering events recommended by the Alternative Reference Rates Committee (ARRC).

In a partial adoption of fallback language, one of the recent refinancing’s replacement language only applied to the refinanced tranches, rather than also addressing other references to the “base rate” in the indenture.

And, all five disregard the recommend step that uses the rate in International Swaps & Derivatives Association standard contracts.

In the release, Fitch notes “In 2017 the regulator of Libor, the Financial Conduct Authority in the U.K., announced that banks would not have to continue Libor submissions beyond 2021. All U.S. broadly syndicated loan and middle market CLOs under Fitch's surveillance have legal maturities after 2021.”

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