Eaton Vance prices $434 million CLO, Ivy Hill sells $360 million; BBB, BB spreads firm

By Cristal Cody

Tupelo, Miss., Oct. 11 - Eaton Vance Management sold $434,225,000 of 11-year notes in a CLO transaction on Friday, according to an informed source.

Eaton Vance CLO 2013-1, Ltd. priced seven tranches of notes with spreads that ranged from Libor plus 136 basis points on the AAA tranche to Libor plus 575 bps on the B-rated slice.

Ivy Hill Asset Management, LP also raised $359.75 million in a CLO backed by small- and medium-sized enterprise and broadly syndicated loans, a market source said.

Year-to-date U.S. CLO issuance is about $61 billion, according to market sources on Friday.

An active pipeline has "attracted most of investors' attention," Dave Preston, an analyst with Wells Fargo Securities LLC, said in a note.

"October has seen a large uptick in issuance," Preston said. "Monthly issuance is already approximately $3 billion, nearly July's total. We expect an active primary calendar for the remainder of the year, which may present opportunities to investors, especially in the mezzanine space, as managers and issuers work to clear the pipeline."

About $13.3 billion of new transactions are in the pipeline, including broadly syndicated and middle market CLOs, according to Barclays on Friday.

Lower-rated CLO spreads have tightened in the last two weeks in the secondary market, market sources said.

BBB and BB spreads are about 10 bps tighter since the end of September, Preston said. BBB spreads were quoted over the week in the Libor plus 430 bps area and BB-rated tranches in Libor plus 640 bps area.

Spreads have stayed weaker at the top of the capital structure in light trading, with AAA spreads for U.S. CLOs on average at Libor plus 140 bps, about 2 bps wider on the month, Preston said.

CLO AA-rated spreads have widened about 15 bps in the past month to the Libor plus 200 bps area. A-rated tranches are quoted also about 15 bps wider in the Libor plus 340 bps area.

"The CLO secondary market has been relatively quiet over the past two to three weeks, as a combination of factors worked together to tamp down trading," Preston said. "The government shutdown has made investors hesitant to act with strong conviction in either direction, and many investors would prefer to wait for a resolution before buying or selling."

Eaton Vance prices CLO

Eaton Vance CLO 2013-1 moved ahead with a deal on Friday and sold $434,225,000 of notes due November 2024, including $257 million of class A-1 senior secured floating-rate notes (Aaa/AAA/) at Libor plus 136 bps; $60.1 million of class A-2 senior secured floating-rate notes (/AA/) at Libor plus 180 bps; $36 million of class B senior secured deferrable floating-rate notes (/A/) at Libor plus 275 bps; $21.3 million of class C senior secured deferrable floating-rate notes (/BBB/) at Libor plus 330 bps; $17.2 million of class D secured deferrable floating-rate notes (/BB/) at Libor plus 500 bps; $7.5 million of class E secured deferrable floating-rate notes (/B/) at Libor plus 575 bps and $35,125,000 of subordinated notes.

J.P. Morgan Securities, LLC arranged the offering.

Eaton Vance Management will manage the CLO, which is backed primarily by U.S. dollar-denominated first-lien senior secured corporate bank loans.

Parent company Eaton Vance Corp. executives said in August during a third-quarter earnings conference call that the Boston-based firm has two CLO transactions in the pipeline that may price before the end of the year.

Ivy Hill prices

Ivy Hill Asset Management priced $359.75 million of notes due Oct. 20, 2025 via Deutsche Bank Securities, Inc. in its first CLO transaction since 2011, according to an informed source.

Ivy Hill Middle Market Credit Fund VII, Ltd. sold $185.25 million of class A senior floating-rate notes (Aaa) at Libor plus 165 bps; $56 million of class B senior floating-rate notes (Aa2) at Libor plus 230 bps; $22.25 million of class C deferrable mezzanine floating-rate notes (A2) at Libor plus 345 bps; $17.5 million of class D deferrable mezzanine floating-rate notes (Baa2) at Libor plus 425 bps; $28 million of class E deferrable mezzanine floating-rate notes (Ba2) at Libor plus 565 bps and $50.75 million of subordinated notes.

The CLO is backed by first-lien senior secured small- and medium-sized enterprise and broadly syndicated loans.

Ivy Hill Asset Management, a subsidiary of Ares Capital Corp., will manage the CLO.

The firm's last CLO deal was the $315 million Ivy Hill Middle Market Credit Fund III, Ltd. transaction that priced in December 2011.

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