CLO issuance surpasses $17 billion; AAA securities stuck at Libor plus 150 bps area

By Cristal Cody

Tupelo, Miss., March 13 - Year-to-date issuance in the collateralized loan obligation market climbed to more than $17 billion following Angelo, Gordon & Co. LP's $622 million transaction and Babson Capital Europe Ltd.'s €413.55 million offering on Thursday, according to informed sources.

Angelo, Gordon priced the CLO via Goldman Sachs & Co.

BofA Merrill Lynch arranged Babson's Babson Euro CLO 2014-1 BV deal.

Final pricing details were not available by press time.

Elsewhere in the market, details emerged for two deals from CIFC Asset Management LLC and Prudential Investment Management, Inc.

CIFC Asset Management sold a $623 million CLO and placed the AAA tranche at Libor plus 150 basis points, according to an informed source.

Prudential Investment Management brought the $621.01 million Dryden 31 Senior Loan Fund/Dryden 31 Senior Loan Fund LLC offering and priced the class A securities at Libor plus 148 bps, according to the company and a market source.

A few AAA-rated CLO securities have priced better than the Libor plus 150 bps level seen so far in 2014, but market sources do not expect much tightening for the class A tranche in the near term.

"We saw Prudential price at 148 [bps plus Libor] and some recent prints inside 150 [bps], but it still feels like that 150 [bps] area," one source said.

CIFC raises $623 million

CIFC Asset Management priced $623 million of notes due April 18, 2025 in the CIFC Funding 2014 Ltd./CIFC Funding 2014 LLC transaction, according to a source.

The CLO priced $372.25 million of class A floating-rate notes (Aaa/AAA/) at Libor plus 150 bps; $52.75 million of class B-1 floating-rate notes (Aa2) at Libor plus 200 bps; $20 million of 4.57% class B-2 fixed-rate notes (Aa2); $47.5 million of class C deferrable floating-rate notes (A2) at Libor plus 280 bps; $31.75 million of class D deferrable floating-rate notes (Baa3) at Libor plus 325 bps; $30 million of class E deferrable floating-rate notes (Ba3) at Libor plus 450 bps; $14.25 million of class F deferrable floating-rate notes (B2) at Libor plus 525 bps and $54.5 million of subordinated notes.

Credit Suisse Securities (USA) LLC was the placement agent.

CIFC Asset Management will manage the CLO, which is backed primarily by broadly syndicated senior secured corporate loans.

CIFC Asset Management was in the market in 2013 with the $516.6 million CIFC Funding 2013-I, Ltd. deal, the $649.65 million CIFC Funding 2013-II, Ltd. offering, the $418 million CIFC Funding 2013-III, Ltd. transaction and the $522.5 million CIFC Funding 2013-IV Ltd. vehicle.

The New York City-based investment adviser is a subsidiary of CIFC Corp.

Prudential prices CLO

Prudential Investment Management sold $621.01 million of notes due April 18, 2026 in the Dryden 31 Senior Loan Fund offering that closed on Thursday, according to the company and a market source.

The CLO priced $373.5 million of class A senior secured floating-rate notes (Aaa/AAA/) at Libor plus 148 bps; $72.75 million of class B senior secured floating-rate notes (Aa2) at Libor plus 210 bps; $46.75 million of class C mezzanine secured deferrable floating-rate notes (A2) at Libor plus 300 bps; $32 million of class D mezzanine secured deferrable floating-rate notes (Baa3) at Libor plus 400 bps; $27 million of class E junior secured deferrable floating-rate notes (Ba2) at Libor plus 570 bps and $15.75 million of class F junior secured deferrable floating-rate notes (B2) at Libor plus 665 bps.

The deal included $53.26 million of subordinated notes in the equity tranche.

Deutsche Bank Securities Inc. was the placement agent.

Prudential Fixed Income will manage the CLO, which is backed by a revolving pool of broadly syndicated senior secured loans.

"With Dryden 31, we have reached a milestone," Peter Cordrey, managing director for Prudential Fixed Income, said in a release. "The transaction is the 10th CLO to be issued globally under the Dryden brand since the re-emergence of the CLO market."

The company brought five CLO deals under the Dryden brand in 2013, including three U.S. transactions and two euro-denominated offerings, according to market sources.

On Jan. 15, Prudential Investment Management refinanced the $304.85 million Dryden XXII Senior Loan Fund/Dryden XXII Senior Loan Fund Corp. transaction.

Prudential Investment Management is the primary asset management business of Newark, N.J.-based Prudential Financial, Inc.

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