Garrison prices $352.8 million in first 2019 CLO; Palmer Square brings $500.25 million

Chicago, Aug. 28 – Garrison Investment Group, LP and Palmer Square Capital Management LLC brought the annual 2019 total for CLO issuance up another $850 million.

Garrison closed on its first CLO of the year, a $352.8 million offering that had Natixis Securities Americas LLC serving as placement agent.

Palmer Square Capital priced $500.25 million in six classes of notes plus a subordinated note class.

On Tuesday, volume was lighter than Monday for investment-grade trading for CBO/CDO/CLOs and heavier for non-investment grade.

In the higher-grade market, $104.78 million was bought or sold, and $44.79 million traded in non-investment grade.

The average price was 98.3 for investment-grade and 79.7 for non-investment grade.

Garrison’s first in 2019

With their new $352.8 million middle-market CLO, Garrison is now managing over $1.1 billion in rated CLO assets.

According to the transaction documents, this new offering will need to be collateralized by at least 85% in senior secured loans and 95% of the loan issuers are required to be based in the United States.

A maximum of 20% of the loans in the collateral pool can be covenant-lite.

According to S&P Global Ratings, the top five industry distributions for the portfolio are: software, auto components, health care equipment and supplies, commercial services and supplies, and road and rail.

Palmer Square prices

Palmer Square priced just over $500 million of 2019-3 notes.

Noteworthy, the portfolio was said to not have a reinvestment period.

Citibank Global Markets was listed as the placement agent for the floating-rate and subordinated notes.

Eaton Vance on its CLOs

Eaton Vance Corp.’s chief executive officer, a firm that was in the market as recently as mid-August with a $390.5 million refinancing, was asked about the state of the CLO market in its third-quarter earnings conference call on Tuesday.

In the question and answer session, JPMorgan analyst Kenneth Worthington asked specifically about what sort of balance sheet exposure the issuer would have, given the state of the market and having witnessed some “leverage loan deals slip in recent weeks.”

Thomas E. Faust, Eaton Vance’s chairman of the board, president and chief executive officer, said that they “don’t see significant issues on the credit side.”

After starting with his response by noting that their CLO business is relatively small, he said that they “have not had issues with liquidity” and they “generally feel that things are OK.”

He went on to say that, “On balance, we think that stimulative moves that are starting to happen in the U.S. and other Western economies are broadly supportive of good credit performance in banks.”

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