Octagon prices $495.05 million CLO; Whitebox sells $404.4 million; outlook positive

By Cristal Cody

Tupelo, Miss., Sept. 4 – New broadly syndicated CLO volume includes deals from Octagon Credit Investors, LLC and Whitebox Capital Management, LLC.

Octagon Credit Investors priced $495.05 million of notes in the manager’s second new offering of the year.

Whitebox Capital Management sold $404.4 million of notes in its first issuance of the year. The CLO manager was last in the primary market in 2019 when it issued a debut CLO on Aug. 22, 2019.

In other market activity on Friday, Marble Point CLO Management LLC closed on its previously reported $494.5 million Marble Point CLO XVIII, Ltd./Marble Point CLO XVIII LLC transaction.

The CLO sold $300 million of the class A floating-rate notes at Libor plus 190 basis points.

Also, GSO/Blackstone Debt Funds Management LLC closed Friday on its $299.15 million previously reported Stratus 2020-2, Ltd./Stratus 2020-2, LLC static CLO offering.

The CLO priced the $193.5 million of class A floating-rate notes at Libor plus 130 bps.

About $48 billion of new CLOs have priced year to date, according to market sources.

S&P Global Ratings said in a CLO credit update report on Friday that the market showed “positive signs” in August.

“For instance, on August 31, widely held auto components company LTI Holding Inc. was upgraded to B- from CCC+, a positive sign for CCC buckets of CLOs,” S&P said. “Additionally, seven issuers across various industries had their B- rating affirmed and removed from CreditWatch negative, after being placed on CreditWatch during Covid-19.”

Since CLOs include B- ratings that are on CreditWatch negative as part of the CCC bucket, the B- rating affirmations resulted in a reduction in CCC buckets for numerous CLOs, according to the report.

Average CCC buckets across S&P’s CLO Insights 2020 index have declined to 10.17%, “with single-digit average CCC buckets coming into view,” S&P said.

The ratings agency had placed a total of 597 U.S. CLOs on CreditWatch due to the pandemic impact.

“As of Sept. 3, we have resolved 458 of the 597 CLO ratings placed on CreditWatch,” S&P said.

Secondary prices improve

Elsewhere, CBO/CDO/CLO paper gained in the secondary market over the week, Trace data shows.

On Thursday, $316.85 million of high-grade CBO/CDO/CLO notes and $44.21 million of lower-rated securities were traded.

High-grade supply this week also included $285.1 million of volume on Wednesday, $262.52 million on Tuesday and $156.35 million on Monday.

Investment-grade CBO/CDO/CLO paper traded better on Thursday at a 98.80 average, compared to 97.80 on Wednesday, 99.10 on Tuesday and 98.30 on Monday.

Trading volume in lower-rated paper totaled $243.6 million on Wednesday, $139.16 million on Tuesday and $53.81 million at the start of the week.

Non-investment-grade CBO/CDO/CLO notes climbed to an average 88.50 on Thursday versus 82.80 on Wednesday, 81.70 on Tuesday and a 76.70 average on Monday.

Octagon 48 prints

Octagon Credit Investors priced $495.05 million of notes due Oct. 20, 2031 in the new offering, according to market sources.

Octagon Investment Partners 48, Ltd./Octagon Investment Partners 48, LLC sold $310 million of class A floating-rate notes at Libor plus 150 bps in the AAA-rated tranche.

Citigroup Global Markets Inc. was the placement agent.

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

Octagon Credit Investors is a New York-based credit investment firm that is majority owned by Conning & Co.

Whitebox CLO II prices

Whitebox Capital Management priced $404.4 million of notes due Oct. 24, 2031 in its CLO transaction, according to market sources.

At the top of the capital stack, Whitebox CLO II Ltd./Whitebox CLO II LLC sold $240 million of class A-1 floating-rate notes at Libor plus 175 bps.

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

The offering is collateralized primarily by broadly syndicated senior secured loans.

The CLO manager is a subsidiary of Minneapolis-based alternative asset manager Whitebox Advisors LLC.

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