CLOs quiet; LCM, Invesco detail CLO refinancings; pickup in refinancing activity forecast

By Cristal Cody

Tupelo, Miss., April 16 - The CLO market was quiet on Wednesday, though the pipeline remains full with deals likely to price after the Easter holiday, according to informed sources.

"Fairly quiet," one source said in the afternoon.

Details of two CLO refinancings in April emerged over the day.

LCM Asset Management LLC refinanced $370.5 million of notes in the LCM X LP/LCM X LLC deal and lowered the spread on the $259 million AAA tranche to Libor plus 126 basis points from Libor plus 148 bps, a source said.

Invesco Senior Secured Management, Inc. refinanced $315.75 million of notes in the Avalon IV Capital, Ltd./Avalon IV Capital LLC transaction, according to an informed source.

The firm refinanced the tranche of class A notes to Libor plus 117 bps from Libor plus 150 bps.

"Year to date, there have been six CLO 2.0 transactions refinanced, all of which are from vintage 2011 and first-half 2012," Morgan Stanley & Co. LLC analysts Vishwanath Tirupattur and Mia Qian said in a note. "We expect the refinancing activity to continue as more 2012 vintage CLO transactions exit their non-call period later this year."

In January, Prudential Investment Management, Inc. refinanced the $304.85 million Dryden XXII Senior Loan Fund/Dryden XXII Senior Loan Fund Corp. transaction and Apollo Global Management, LLC refinanced the $436.7 million ALM V, Ltd./ALM V LLC deal.

Sankaty Advisors LLC refinanced $362 million of notes in the Race Point V CLO, Ltd. transaction in February.

In March, ING Alternative Asset Management LLC refinanced the $326.5 million ING IM CLO 2012-1, Ltd. deal.

LCM refinances $370.5 million

LCM Asset Management refinanced $370.5 million of notes due April 15, 2022 in the LCM X CLO first brought in 2012, according to an informed source.

The firm refinanced the $259 million tranche of class A floating-rate notes, originally priced at Libor plus 148 bps, to class A-R notes at Libor plus 126 bps.

The $45 million tranche of class B floating-rate notes, originally placed at Libor plus 290 bps, was refinanced to class B-R notes at Libor plus 190 bps.

LCM Asset Management refinanced $29.5 million of class C floating-rate notes from Libor plus 315 bps to class C-R notes at Libor plus 285 bps.

The $20 million tranche of class D floating-rate notes, originally priced at Libor plus 460 bps, was refinanced to class D-R floating-rate notes at Libor plus 375 bps.

Finally, LCM Asset Management refinanced $17 million of class E floating-rate notes from Libor plus 575 bps to class E-R notes at Libor plus 550 bps.

The original $410 million CLO deal also included $39.5 million of LP certificates in the equity tranche.

BNP Paribas Securities Corp. arranged the refinancing.

The CLO is backed by a revolving pool of broadly syndicated senior secured loans.

Proceeds from the replacement notes were used to redeem the original notes in full.

The New York City-based asset management firm was last in the market in January with the new $624 million LCM XV LP/LCM XV LLC CLO transaction.

Invesco lowers spreads

Invesco Senior Secured Management refinanced $315.75 million of notes due April 17, 2023 in the Avalon IV Capital transaction, according to an informed source.

The firm refinanced the tranche of $231 million of class A floating-rate notes (Aaa/AAA/) to Libor plus 117 bps from Libor plus 150 bps.

The tranche of $23 million of class B floating-rate notes (/AA/) was refinanced to Libor plus 185 bps from Libor plus 275 bps.

The firm refinanced $32 million of class C deferrable floating-rate notes (/A/) to Libor plus 285 bps from Libor plus 360 bps.

The $16 million tranche of class D deferrable floating-rate notes (/BBB/) was refinanced to Libor plus 385 bps from Libor plus 500 bps.

In the last tranche, Invesco refinanced $13.75 million of class E deferrable floating-rate notes (/BB/) to Libor plus 560 bps from Libor plus 610 bps.

The original $350 million offering brought in 2012 included $34.25 million of subordinated notes in the equity tranche.

Citigroup Global Markets Inc. arranged the refinancing deal.

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

Invesco Senior Secured Management, a subsidiary of Atlanta-based Invesco, Ltd., was last in the primary market in February with the $669.75 million Limerock CLO II Ltd./Limerock CLO II LLC deal.

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