Babson prints CLO with tightest levels of year; secondary volume rises; equity up for bids

By Cristal Cody

Eureka Springs, Ark., Aug. 3 – Babson Capital Management LLC priced its $411 million Babson CLO 2016-II Ltd./Babson CLO 2016-II LLC offering with some of the tightest prints of the year.

“A CLO from Babson Capital Management that priced on Friday was the tightest that we have seen at most levels since mid last year,” Deutsche Bank Securities Inc. analyst Bjarni Torfason said in a note on Wednesday.

“At the AAA level, the discount margin of 145 [basis points] over Libor is the lowest since August last year,” he said.

“At L+190 bps, the AA tranche was the tightest priced since June last year. The 260 bps discount margin of the single A rated tranche is the tightest pricing ever for a single A rated tranche but three deals in May and June have priced at that level as well,” Torfason said. “The 420 bps discount margin of the BBB tranche was the tightest since last September and finally the BB priced at L+775, where a few deals have priced their BB tranches this year.”

Morgan Stanley & Co. LLC was the placement agent for the sale on Friday.

The notes are due Oct. 13, 2028. The CLO will have a two-year non-call period and a four-year reinvestment period.

The deal is backed primarily by first-lien senior secured loans.

Springfield, Mass.-based Babson has priced two U.S. CLO transactions year to date.

Meanwhile, U.S. CLO secondary trading remains active.

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