LCM raises $624 million in LCM XV CLO; Arrowpoint preps $419 million CLO; deal flow slows

By Cristal Cody

Tupelo, Miss., Jan. 28 - LCM Asset Management LLC priced the $624 million LCM XV LP/LCM XV LLC collateralized loan obligation transaction on Tuesday, while details emerged for Arrowpoint Asset Management LLC's $419 million upcoming deal, according to market sources.

LCM Asset Management sold the $378 million tranche of class A senior floating-rate notes due 2024 (Aaa/AAA/) at Libor plus 150 basis points, a source said.

Otherwise, pricing action remains light for the first month of the year, sources said.

"Deal flow is much lower than it was last year," one informed source said on Tuesday.

A handful of U.S. and European CLO transactions are expected to price in the next few weeks, according to market sources.

The slow issuance out of the gate this year is attributed to the Volcker Rule as market participants wait for additional clarity from regulators, sources said.

The Volcker Rule was issued on Dec. 10 as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act and is set to go into effect in 2015. It prohibits banks from owning CLOs that hold debt securities.

About 56% of U.S. CLOs and about 57% of European CLOs have bonds in their portfolios, according to a Wells Fargo Securities, LLC report on Tuesday.

LCM prices $624 million

LCM Asset Management priced the $624 million LCM XV CLO via Morgan Stanley & Co. LLC on Tuesday, according to an informed source.

The CLO sold $4 million of class X senior floating-rate notes due 2017 (Aaa/AAA/) at Libor plus 100 bps and $378 million of class A senior floating-rate notes due 2024 (Aaa/AAA/) at Libor plus 150 bps at the top of the capital structure.

The CLO also priced $63 million of class B senior floating-rate notes due 2024 (/AA/) at Libor plus 215 bps; $55.5 million of class C deferrable floating-rate notes due 2024 (/A/) at Libor plus 315 bps; $30 million of class D deferrable floating-rate notes due 2024 (/BBB/) at Libor plus 335 bps; $30 million of class E deferrable floating-rate notes due 2024 (/BB-/) at Libor plus 445 bps and $63.51 million of subordinated notes due 2024.

LCM Asset Management will manage the CLO.

The New York City-based asset management firm was in the CLO primary market in 2013 with the $519 million LCM XIII LP deal and the $417.75 million LCM XIV LP offering.

Arrowpoint plans CLO

Arrowpoint Asset Management plans to price $419 million of notes due March 2026 in the Arrowpoint CLO 2014-2 Ltd./Arrowpoint CLO 2014-2 Corp. transaction, according to a market source.

The deal includes $250 million of class A-1L senior secured floating-rate notes (/AAA/); $50 million of class B floating-rate notes (/AA/); $29 million of class C deferrable floating-rate notes (/A/); $22 million of class D deferrable floating-rate notes (/BBB/); $19 million of class E deferrable floating-rate notes (/BB-/); $7 million of class F deferrable floating-rate notes (/B/) and $42 million of subordinated notes.

Jefferies LLC will arrange the transaction.

Arrowpoint Asset Management will manage the cash flow CLO.

The deal is expected to close in March.

Denver-based Arrowpoint Asset Management was last in the CLO primary market in April with the $310.2 million Arrowpoint CLO 2013-1 Ltd./Arrowpoint CLO 2013-1 LLC deal.

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