May CLO issuance slightly higher than April pipeline; Dryden sells $415.58 million CLO

By Cristal Cody

Tupelo, Miss., May 30 - The Dryden XXVIII Senior Loan Fund sold a $415.58 million collateralized loan obligation, bringing May CLO issuance to about $4 billion, according to market sources on Thursday.

"It's been slower than it was in the first quarter, which is to be expected because we had such a huge amount of new issuance in the first quarter," said Kenneth Kroszner, a CLO strategy analyst at RBS Securities Inc. "In March, there was $10.7 billion of U.S. CLOs issued. This month, there's only been $4 billion of new deals issued."

CLO issuance in April reached $3.9 billion.

The market remains on track to hit about $70 billion of issuance for the year, according to market sources.

In new deals, CLO manager Prudential Investment Management Inc. brought the $415.58 million Dryden XXVIII Senior Loan Fund, its seventh offering under Prudential Financial Inc.'s Dryden brand in the last 17 months.

In March, Prudential priced the $425 million Dryden XXVI Senior Loan Fund, followed in April by the €300 million Dryden XXVII Euro CLO 2013 BV deal, the second CLO offering to price in Europe since the financial crisis. The European CLO is managed by Prudential's leveraged finance arm in London, Pramerica Investment Management Ltd.

Dryden XXVIII prices

Dryden XXVIII Senior Loan Fund/ Dryden XXVIII Senior Loan Fund LLC sold $415.58 million of notes in the CLO that closed on Thursday, a market source said.

Dryden priced $249 million of the Aaa-rated tranche at Libor plus 110 basis points.

The fund also sold $2.5 million of class X senior secured floating-rate notes due Nov. 25, 2016 (Aaa) at Libor plus 75 bps.

In the rest of the deal, Dryden sold $49 million of class A-2L senior secured floating-rate notes at Libor plus 160 bps; $34.5 million of class A-3L mezzanine secured deferrable floating-rate notes at Libor plus 275 bps; $21 million of class B-1L mezzanine secured deferrable floating-rate notes at Libor plus 350 bps; $19 million of class B-2L junior secured deferrable floating-rate notes at Libor plus 450 bps; $5.5 million of class B-3L junior secured deferrable floating-rate notes at Libor plus 575 bps; and $35.08 million of subordinated notes.

RBS Securities was the underwriter.

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

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