Invesco prices $513.5 million; Fifth Street eyes middle-market CLO; secondary trading thin

By Cristal Cody

Tupelo, Miss., Aug. 21 – Invesco Senior Secured Management, Inc. tapped the CLO market with a $513.5 million deal, while a middle-market CLO manager plans to bring an offering, according to sources on Friday.

Fifth Street CLO Management LLC is in the pipeline with a $416.6 million CLO backed by middle-market loans.

“On the CLO primary side, August is shaping up to be another light month,” Wells Fargo Securities, LLC senior analyst Dave Preston and associate analyst Mackenzie Miller said in a note on Friday. “CLO managers have priced seven deals for $3.9 billion month to date, which is less than half the CLO volume priced in July.”

The primary market “may see a challenging September” with factors including a heavy pipeline of commercial mortgage backed securities, the Labor Day holiday and the Federal Reserve’s policy meeting, but fourth-quarter issuance could be strong with pressure to issue before year-end, the analysts said.

CLO AAA spreads are mostly unchanged from the same period a year ago in the Libor plus 150 basis points area, according to the note.

In the secondary market, trading was thin over the week “as secondary sellers found waning interest and wider bids amid broad market turbulence,” the Wells Fargo analysts said. “The sell-off in equities and oil, and continued pressure in high yield left CLO investors wary to step in and buy with future volatility expected.”

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