CIFC prices €407.5 million CLO; Fortress returns with new issue; refinancing volume eyed

By Cristal Cody

Tupelo, Miss., July 1 – CIFC Asset Management LLC brought a debut €407.5 million European CLO to the primary market on Monday.

CIFC Asset Management previously tapped the dollar-denominated primary market in June with the $510.6 million CIFC Funding 2019-IV, Ltd. broadly syndicated CLO deal, which settles July 17.

In other new issuance, Fortress Investment Group LLC sold $451.75 million of notes in its first broadly syndicated CLO offering this year.

New issue supply in the first half of the year for the CLO market “lagged” compared to 2017 and 2018 and is expected to slow in the second half with a light loan supply on tap and tighter loan spreads, according to a BofA analysts’ research note released on Monday.

Refinancing activity, though, is expected to see a moderate pace increase.

Year to date, about $62 billion of new issue CLOs have priced, while about $22 billion of vintage CLOs have been refinanced, reset or reissued, according to the report.

“We maintain our full year issuance forecasts of $105 [billion] for new issue and $55 [billion] for refis/resets/reissues, which implies a slowdown in the rate of issuance of the former and an acceleration in volume for the latter,” the BofA analysts said.

Refinancing issuance rose in the second quarter to $13 billion from $9 billion of volume in the first quarter, according to the report.

Meanwhile, CLO spreads have performed well in the secondary market in the first half of the year with AAA spreads about 17 basis points tighter year to date, the analysts said.

Lower down the stack, BB tranches have tightened on average about 70 bps, while BBB spreads have come in about 30 bps so far this year.

B-rated CLO tranches have been a “notable laggard,” with generic spreads widening on the year by around 25 bps, the analysts said.

CIFC prices euro CLO

CIFC Asset Management priced €407.5 million of notes due July 15, 2032 in the CIFC European Funding CLO I DAC broadly syndicated CLO offering, according to market sources on Monday.

In the AAA-rated tranches, the CLO sold €2 million of class X senior secured floating-rate notes at Euribor plus 50 bps and €248 million of class A senior secured floating-rate notes at Euribor plus 114 bps.

Deutsche Bank AG, London Branch was the placement agent.

CIFC CLO Management II, LLC will manage the CLO.

The offering is backed primarily by euro-denominated broadly syndicated senior secured obligations.

CIFC Asset Management is an investment adviser based in New York.

Fortress brings CLO

Fortress Investment Group sold $451.75 million of notes due July 23, 2032 in a CLO transaction, according to market sources.

At the top of the capital stack, Fortress Credit BSL VII Ltd./Fortress Credit BSL VII LLC priced $243 million of class A-1 floating-rate notes at Libor plus 145 bps and $41 million of class A-2 floating-rate notes at Libor plus 200 bps.

MUFG was the placement agent.

FS BSL VII Management LLC will manage the CLO.

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

Fortress Investment was in the primary market in 2018 with three refinancings, including a reset of $379.3 million of notes from the vintage 2015 transaction, Fortress Credit BSL VI Ltd./Fortress Credit BSL VI LLC, formerly known as Hildene CLO IV, Ltd./Hildene CLO IV LLC.

Fortress Investment is a New York City-based investment firm.

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