LCM Asset Management, Mountain View CLOs price; two new offerings emerge; trading quiet

By Rebecca Melvin

New York, Aug. 26 – Pricing emerged in two U.S. CLO deals on Tuesday in a market that was otherwise “pretty quiet,” market sources said.

LCM Asset Management LLC sold $410.5 million of notes due 2026 in the LCM XVII LP/LCM XVII LLC CLO transaction that was placed by BofA Merrill Lynch, and BlueMountain Capital Management LLC has sold $518.5 million in the Mountain View CLO 2014-1 Ltd./Mountain View CLO 2014-1 Corp. CLO transaction that was placed by Morgan Stanley & Co. LLC.

In addition, two new offerings materialized for upcoming pricing, including Octagon Credit Investors LLC’s 2026 notes in the Octagon Loan Funding Ltd./LLC CLO and the ECP CLO 2014-6 Ltd./ ECP CLO 2014-6 LLC’s approximately $850 million CLO.

Other deals remain on the horizon, including CLOs from Alcentra Ltd., Black Diamond CLO 2014-1 Ltd., Dryden XXVII Euro CLO 2013 BV, JMP Group Inc., Redan Park Asset Management LLC and Telos CLO.

Back in the secondary market, one source said there were a couple of bid lists in the market on Tuesday, but he wasn’t aware if any of the names traded. “The market has been pretty dead,” he said.

Light market activity precedes the upcoming Labor Day holiday weekend and the unofficial end of summer.

In terms of pricing, the LCM CLO includes $225 million of class A floating-rate notes at Libor plus 145 basis points; $29 million of class B-1 floating-rate notes at Libor plus 205 bps; $24 million of class B-2 fixed-rate notes at 4.35%; $22 million of class C deferrable floating-rate notes at Libor plus 300 bps; $18 million of class D deferrable floating-rate notes at Libor plus 350 bps; $20 million of class E deferrable floating-rate notes at Libor plus 475 bps and $42.5 million of subordinated notes.

BofA Merrill Lynch was the placement agent for the CLO that will be managed by the New York City-based asset management firm. LCM has priced two CLO deals in 2014, including the $725.6 million LCM XVI LP/LCM XVI LLC transaction on May 12.

The MountainView CLO priced $3 million of class X floating-rate notes (/AAA/) at Libor plus 100 bps; $316.75 million of class A floating-rate notes (/AAA/) at Libor plus 151 bps; $47.25 million of class B floating-rate notes (/AA/) at Libor plus 254 bps; $48 million of class C deferrable floating-rate notes (/A/) at Libor plus 325 bps; $25.5 million of class D deferrable floating-rate notes (/BBB/) at Libor plus 375 bps; $22.5 million of class E deferrable floating-rate notes (/BB-/) at Libor plus 533 bps; $8 million of class F deferrable floating-rate notes (/B-/) at Libor plus 580 bps; and $47.5 million of subordinated notes.

Morgan Stanley & Co. LLC was the placement agent for this CLO managed by BlueMountain, a New York-based private investment firm.

The pricing action was a continuation of the trend that saw 23 new CLO deals in July. The deals were worth about $13.4 billion, just short of June’s all-time record of $13.8 billion, according to Deutsche Bank CLO analyst Bjarni K. Torfason.

“Loan issuance in July was the biggest since September last year, both measured by total volume and by new loans not for refinancing purposes. This continued the substantial loan issuance we have seen consistently this year, with a drop in May,” Torfason wrote in research published Aug. 8.

“That drop occurred after a late April sell-off, and unless markets rebound strongly very quickly, issuance in August is likely to suffer on top of the late summer slowness that usually influences August,” Torfason wrote.

Tuesday’s pricings put a little bit of a dent in the summer slowdown in effect, however.

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