Eaton Vance prices $405.2 million CLO; LCM offers $404.2 million deal; resets slow

By Cristal Cody

Tupelo, Miss., April 22 – Eaton Vance Management priced $405.2 million of notes in the manager’s first CLO offering of 2019.

Meanwhile, LCM Asset Management LLC plans to price $404.2 million of notes in a new CLO deal expected to close in June.

LCM priced the $404.55 million LCM 30 Ltd./LCM 30 LLC transaction in March with the offering set to close April 25. The CLO priced $242 million of the class A-1 senior floating-rate notes at Libor plus 133 basis points.

In other activity, Fitch Ratings said in a report released on Friday that euro-denominated CLOs are “starting to amortize” as higher liability spreads make refinancing vintage deals less attractive.

“Managers took advantage of benign market conditions and extensively refinanced liabilities with 70 deals refinanced or reset, including re-issues, in 2017 and 40 in 2018,” Fitch said. “But funding costs rose over the last six months making refinancing and resets less attractive. There were only four resets in fourth-quarter 2018 and two in first-quarter 2019.”

Elsewhere, leveraged loan funds continued to see outflows for the 22nd consecutive week with $516 million withdrawn in the week ending April 17, Fitch said.

Eaton Vance prices

Eaton Vance Management priced $405.2 million of notes due April 15, 2032 in a new CLO deal, according to a market source on Monday.

At the top of the capital stack, Eaton Vance CLO 2019-1 Ltd./Eaton Vance CLO 2019-1, LLC sold $246 million of class A-1 senior secured floating-rate notes at Libor plus 133 bps, $14 million of class A-2 senior secured floating-rate notes at Libor plus 170 bps and $44 million of class B senior secured floating-rate notes at Libor plus 185 bps.

Wells Fargo Securities, LLC arranged the transaction.

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

Boston-based Eaton Vance Management is a subsidiary of Eaton Vance Corp.

LCM in deal pipeline

LCM Asset Management plans to price $404.2 million of notes due April 15, 2031 in the LCM 29 Ltd./LCM 29 LLC CLO deal, according to market sources.

The deal includes $2 million of class X senior floating-rate notes (Aaa/AAA); $240 million of class A-1 senior floating-rate notes (Aaa/AAA); $20 million of class A-2 senior floating-rate notes (Aaa/non-rated/); $44 million of class B senior floating-rate notes (AA); $24 million of class C deferrable mezzanine floating-rate notes (A); $24 million of class D deferrable mezzanine floating-rate notes (BBB-); $13.6 million of class E deferrable mezzanine floating-rate notes (BB-) and $36.6 million of subordinated notes.

Natixis Securities Americas LLC is the placement agent.

Collateralization includes mostly broadly syndicated first-lien senior secured corporate loans.

The offering is expected to close June 6.

The New York City-based asset management firm is a subsidiary of Tetragon Financial Group Ltd.

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