Cent CLO 19 to sell $411.4 million; primary 'tepid' in quarter; deal spreads hold wider

By Cristal Cody

Tupelo, Miss., Oct. 2 - The new deal pipeline in the collateralized loan obligation market includes a $411.4 million transaction expected in October from Columbia Management Investment Advisors, LLC, a market source said on Wednesday.

About $57 billion of CLOs have priced year to date, with about $4.6 billion sold in September, according to informed sources.

"The new-issue CLO market remained tepid in the third quarter, partially due to a seasonally slow summer, and partially due to an increasing anxiety over a potential tapering by the Fed," David Yan, an analyst with Credit Suisse Securities (USA) LLC, said in a note.

"Around $13.4 billion of new CLOs were priced during the quarter, compared with $16.7 billion in the second quarter and $26.3 billion in the first quarter. However, [year to date], the total tally stands around $56.4 billion, already surpassing the 2012 total issuance of $54 billion."

New issue CLO spreads "remain at relative wide levels," Yan said.

The AAA-rated tranches in recent deals have priced with spreads of Libor plus 135 basis points to 140 bps, sources report.

H.I.G. Capital, LLC sold $238.8 million of AAA-rated notes at Libor plus 140 bps in the $408.9 million WhiteHorse VII Ltd./WhiteHorse VII LLC CLO brought in late September, according to a market source.

Cent CLO 19 in pipeline

The Cent CLO 19 Ltd./Cent CLO 19 Corp. deal will be Columbia Management Investment Advisors' first transaction since it priced the $527.5 million Cent CLO 18 Ltd./Cent CLO 18 Corp. offering in May.

Cent CLO 19 will price notes due Oct. 15, 2025 that include $100 million of class A-1a senior secured floating-rate notes (Aaa); $10 million of class A-1b senior secured fixed-rate notes (Aaa); $151.2 million of class A-1c senior secured floating-rate notes (Aaa); $12.8 million of class A-2a senior secured floating-rate notes; $20 million of class A-2b senior secured fixed-rate notes; $38 million of class B senior secured deferrable floating-rate notes; $20.9 million of class C deferrable floating-rate notes; $17.5 million of class D deferrable floating-rate notes and $41 million of subordinated notes.

J.P. Morgan Securities LLC is the underwriter.

The cash flow CLO is collateralized primarily by broadly syndicated senior secured corporate loans.

The deal is expected to close on Nov. 15.

The investment management firm is based in Boston.

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