Prudential, Sound Point refinance vintage CLOs; Oaktree on tap; U.S. March supply thin

By Cristal Cody

Tupelo, Miss., March 15 – CLO refinancing action is gaining steam after a quiet start to the year.

Prudential Investment Management, Inc. sold $939.95 million of notes in a second refinancing of a vintage 2014 CLO deal that closed on Friday.

Sound Point Capital Management LP priced $644 million of notes in a refinancing of a vintage 2016 CLO.

About $5 billion of vintage CLOs have been refinanced year to date, according to market sources. Reprint volume is expected by market analysts to decline substantially in 2019. BofA Merrill Lynch cut its yearly refinancing forecast by 45% in January to about $55 billion of expected issuance.

Meanwhile, Oaktree Capital Management LP plans to price a $732.2 million CLO in the manager’s first new issuance of the year.

Dollar-denominated primary supply has thinned in March, though the market faces a heavy pipeline of potential issuers, according to a Wells Fargo Securities, LLC research report on Friday.

“March U.S. CLO primary volume has been on the lighter side thus far, with only $3.3 billion issued so far – a drop from February’s $13 billion,” Wells Fargo senior analyst Dave Preston and associate analyst Mackenzie Miller said.

March volume through Thursday is down from the $4.8 billion of CLOs priced in the same period in 2018, according to the report.

Year to date, more than $21 billion of new CLOs have priced, down 12% compared to the same period last year, the analysts said.

In other market activity, outflows from leveraged loans rose to $550 million for the week ended March 13 from $130 million in the previous week, according to a BofA Merrill Lynch report released on Friday.

Prudential reprices CLO

Prudential Investment Management sold $939.95 million of notes in a second refinancing of a vintage 2014 CLO deal that closed on Friday, according to a market source and a notice of revised proposed supplemental indenture.

Dryden 33 Senior Loan Fund/Dryden 33 Senior Loan Fund LLC priced $630 million of class A-R2 floating-rate notes at Libor plus 123 basis points in the AAA-rated tranche.

Goldman Sachs & Co. was the refinancing agent.

The maturity on the CLO notes was extended to April 15, 2029 from Oct. 15, 2028.

The CLO was first refinanced on Nov. 22, 2016 in a $937.35 million deal. In that offering, the CLO priced $630 million of the class A-R floating-rate notes at Libor plus 143 bps.

The original transaction was issued May 7, 2014.

The CLO is collateralized primarily by broadly syndicated first-lien senior secured corporate loans.

Proceeds from the refinancing were used to redeem the outstanding notes.

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

Sound Point reprints

Sound Point Capital Management sold $644 million of notes due Oct. 20, 2028 in a refinancing of the vintage 2016 Sound Point CLO XII, Ltd. transaction, according to a market source.

The CLO priced $451.5 million of class A-R senior secured floating-rate notes at Libor plus 129 bps in the senior tranche.

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

In the original $722.5 million offering issued Aug. 16, 2016, the CLO sold $451.5 million of the class A floating-rate notes at Libor plus 166 bps.

Proceeds were used to redeem the original notes. The subordinated notes will remain outstanding.

The refinanced notes were admitted for listing to trade on the Euronext Dublin.

The CLO is collateralized mostly by broadly syndicated first-lien senior secured corporate loans.

Sound Point Capital is an asset management firm based in New York.

Oaktree offers CLO

In new supply, Oaktree Capital Management plans to price $732.2 million of notes due April 22, 2030 in the Oaktree CLO 2019-1 Ltd./Oaktree CLO 2019-1 LLC offering, according to a market source.

The transaction includes $442.5 million of class A-1 senior secured floating-rate notes (Aaa/AAA); $37.5 million of class A-2 senior secured floating-rate notes (Aaa/AAA); $86.25 million of class B senior secured floating-rate notes (Aa3/AA); $8.75 million of class C secured deferrable floating-rate notes (A); $45 million of class D secured deferrable floating-rate notes (BBB-); $28,125,000 of class E secured deferrable floating-rate notes (BB-) and $55,075,000 of subordinated notes.

Wells Fargo Securities, LLC is the placement agent.

The issue is collateralized mainly by broadly syndicated senior secured corporate loans.

Oaktree has refinanced one vintage CLO year to date.

The Los Angeles-based asset management firm is a subsidiary of Oaktree Capital Group, LLC.

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