American Money prices $302.64 million CLO; Golub brings first TALF CLO; secondary thins

By Cristal Cody

Tupelo, Miss., Oct. 26 – Pricing action in the CLO market remains steady in October, while secondary volume is beginning to decline.

American Money Management Corp. priced a $302.64 million broadly syndicated CLO in its first deal of the year.

Nearly $70 billion of new CLOs have priced year to date, sources report.

Meanwhile, GC Investment Management LLC’s $677.53 million middle-market CLO, Golub Capital Partners TALF 2020-1, LP/Golub Capital Partners TALF 2020-1, LLC, that priced last week marks the first TALF issuance in the CLO space, according to a BofA Securities, Inc. research note released on Monday.

The CLO sold $409.5 million of class A floating-rate notes at Libor plus 195 basis points in the senior tranche.

SG Americas Securities LLC was the placement agent.

The notes are backed primarily by a static portfolio of middle-market senior secured corporate loans.

“After previously excluding the CLO asset class from its first version of TALF in March, the Federal Reserve announced in April that it was including AAA-rated CLO paper as part of the facility,” the BofA report said.

The inclusion is based upon certain deal and collateral eligibility criteria being met, including that only static CLOs collateralized by leveraged loans are eligible collateral, the underlying CLO must be issued on or after March 23, 2020 and 95% or more of underlying collateral in a CLO must be arranged by a lead or a co-lead arranger that is a U.S.-organized entity and be made to U.S.-domiciled borrowers.

The TALF loans financing CLOs are subject to an interest rate of 150 bps over the 30-day average Secured Overnight Financing Rate, BofA notes.

“These conditions, among others, mandated by the Fed have led to the broader CLO community not participating in this program and is especially true for managers of BSL CLOs who look for sourcing loans in the secondary market amid a lack of primary supply,” the BofA report said.

Meanwhile, secondary volume is thinning ahead of the U.S. presidential election.

BWIC volume declined to $454 million last week from $889 million in the week prior, according to the BofA report.

CLO spreads were mostly flat last week. AAAs headed out on Friday unchanged on the week at Libor plus 145 bps. AA tranches were the lone exception, softening an average 5 bps to Libor plus 205 bps.

BBB spreads were steady at Libor plus 475 bps.

Primary spreads were flat at the top of the stack with AAA tranches printing at an average Libor plus 131 bps.

AMMC CLO 23 prints

American Money Management priced $302.64 million of notes due Oct. 17, 2031 in the new broadly syndicated CLO offering, according to market sources.

AMMC CLO 23, Ltd./AMMC CLO 23 LLC sold $148 million of class A-1-L floating-rate notes at Libor plus 140 bps at the top of the capital structure.

SG Americas Securities was the placement agent.

The offering is backed primarily by broadly syndicated senior secured corporate loans.

American Money Management is a Cincinnati-based firm and subsidiary of insurance holding company American Financial Group, Inc.

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