AB Private Credit Investors prices its second CLO to date; secondary picks up; spreads flat

By Cristal Cody

Tupelo, Miss., June 12 – AB Private Credit Investors LLC priced $348.9 million of notes in the middle-market CLO manager’s first CLO offering of 2017 and second deal to date.

Middle-market CLO volume year to date totals nearly $7 billion, according to a BofA Merrill Lynch research report released on Monday.

More than $33 billion of new broadly syndicated CLOs have priced year to date, while nearly $84 billion have been refinanced.

CLO secondary market activity was stronger over the past week, according to the BofA Merrill Lynch note.

“BWIC volume totaled $312 [million] which represents a 37% [week over week] increase but is still relatively low compared to average levels historically,” BofA Merrill Lynch analysts said in the note.

The market focused more on the mezzanine part of the capital stack with 78% of the bids for BB and B tranches, the analysts said.

“While some money managers are monetizing what has been a great run for mezz CLO 2.0s, many hedge funds are seeking seasoned mezzanine paper,” the analysts said.

CLO spreads overall were unchanged on the week with AAAs on Friday at Libor plus 115 basis points and B-rated spreads unchanged at Libor plus 775 bps.

AB sells $348.9 million

AB Private Credit Investors sold $348.9 million of notes due July 20, 2029 in the new ABPCI Direct Lending Fund CLO II Ltd./ABPCI Direct Lending Fund CLO II LLC offering, according to a market source.

The middle-market CLO priced $195.6 million of class A-1 floating-rate notes at a discount margin of Libor plus 178 bps in the senior tranche.

Natixis Securities Americas LLC arranged the offering.

AB Private Credit Investors will manage the CLO.

The deal is collateralized primarily by U.S. senior secured loans.

The CLO has a two-year non-call period and a four-year reinvestment period.

The offering is the CLO manager’s second CLO transaction to date.

Middle-market lender AB Private Credit Investors is a subsidiary of New York-based AllianceBernstein LP.

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