Sound Point brings $399.32 million CLO; Wells Fargo boosts dollar CLO supply forecast

By Cristal Cody

Tupelo, Miss., June 30 – Sound Point Capital Management LP closed Tuesday on $399.32 million of notes in the manager’s first dollar-denominated broadly syndicated CLO offering priced this year.

Sound Point CLO XXVI, Ltd./Sound Point CLO XXVI Inc. priced $208 million of class A-1A floating-rate notes at Libor plus 185 bps in the senior tranche.

Citigroup Global Markets Inc. was the placement agent.

Year to date, more than $30 billion of new dollar-denominated broadly syndicated CLOs and over €8 billion of new euro-denominated broadly syndicated CLOs have priced, according to market sources.

Issuance picked up in June after supply came to a standstill in March from the pandemic impact.

On Tuesday, Wells Fargo Securities, LLC analysts raised their dollar-denominated yearly supply forecast to $65 billion from $50 billion.

“We expect spreads to tighten early in Q3, on strong technicals, before widening due to moves in competing sectors, regulatory risk due to the U.S. election, and declining fundamentals,” the analysts said in a note on Tuesday. “We believe the accuracy of forecasts is more uncertain now, as the outcome will be driven by the path of Covid-19, and by central bank support and government reactions.”

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