Primary returns; GC prices middle market CLO; Greywolf joins pipeline; secondary slows

By Cristal Cody

Tupelo, Miss., Nov. 7 – Primary issuance in the CLO market remains strong going into the final months of the year, according to market sources on Friday.

“Primary volume for October had a strong finish, as more than $11 billion was issued in the United States,” Wells Fargo Securities, LLC senior analyst Dave Preston and associate analyst Jason McNeilis said in a note.

“European CLO primary volume for October was the second-highest month in the post-crisis period at €1.8 billion. We expect the primary calendar to remain active through year-end, as managers focus on building AUM prior to risk retention and underwriters work to clear balance sheet capacity.”

GC Investment Management LLC tapped the market with a $355,823,000 middle-market CLO deal, according to a source on Friday.

Golub Capital Partners CLO 21 (M) Ltd./Golub Capital Partners CLO 21 (M) LLC sold $182.5 million of class A senior secured floating-rate notes at Libor plus 190 basis points at the top of the capital structure.

The CLO priced $26.25 million of class D deferrable floating-rate notes at Libor plus 400 bps at the bottom of the capital stack.

Wells Fargo Securities LLC arranged the transaction.

GC Investment Management, an affiliate of New York-based middle market lender Golub Capital, brought three CLO transactions in 2013.

Greywolf deal on tap

Coming up in primary activity, CLO manager Greywolf Capital Management LP plans to price $437.35 million of floating-rate and subordinated notes due 2026, according to a market source.

The Greywolf CLO IV, Ltd./Greywolf CLO IV, LLC offering includes $269.18 million of class A-1 floating-rate notes (//AAA); $54.24 million of class A-2 floating-rate notes (/AA/); $31.78 of class B deferrable floating-rate notes (/A/); $21 million of class C deferrable floating-rate notes (/BBB/); $16.4 million of class D deferrable floating-rate notes (/BB/); $10.2 million of class E secured deferrable floating-rate notes (/B/) and $34.55 million of subordinated notes.

J.P. Morgan Securities LLC is the placement agent.

Purchase, N.Y.-based Greywolf Capital Management was last in the primary market in March with the $640.99 million Greywolf CLO III, Ltd./Greywolf CLO III, LLC transaction.

Secondary slows

CLO secondary trading has slowed as investors focus on the primary market, according to Wells Fargo.

“It appears that some of the mezzanine spread widening has stopped, although manager tiering continues to be pronounced in the lower-rated tranches,” the analysts said. “Through year-end, we expect trading levels to be choppy, with little sign of a tightening bias.

“An ambitious primary calendar also should help keep secondary levels messy, as some managers focus on printing deals rather than holding out for the best possible execution levels, especially on mezzanine tranches.”

CLO AAA notes were quoted 11 bps wider on the month at Libor plus 163 bps, while BBB notes were out 15 bps at Libor plus 465 bps.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.