Carlyle, GSO/Blackstone, Prudential expected in CLO market; Ableco sells $589.3 million

By Cristal Cody

Tupelo, Miss., Sept. 17 - New CLO issuance is expected later in the year from Carlyle Investment Management LLC, GSO/Blackstone Debt Funds Management LLC and Prudential Financial, Inc., according to an informed source.

"They're in the pipeline," the source said. "They're expected before the year closes."

In new deals brought to market, Ableco Capital LLC sold $589.3 million of class A loans at spread ranges of Libor plus 220 basis points to Libor plus 600 bps, according to market sources.

In other market activity, Fitch Ratings said in a report on Tuesday that it has "observed some banks, particularly smaller ones, increasing the allocation of their investment portfolios to CLOs with the intent of both increasing the floating-rate position of their portfolios and also improving overall yields."

And "as a result, some credit risk from leveraged loans offloaded at origination by some banks has resurfaced in other banks via the use of CLO structures," the agency said.

Fitch said that as new loan activity has remained strong in 2013, banks have increasingly shifted their focus away from holding loan positions to serve primarily as facilitators and distributors in the market.

Ableco sells $589.3 million

Ableco Capital sold the CLO offering of loans due May 31, 2019, which are backed by a static pool of mostly middle-market senior secured first-lien and second-lien loans, via Natixis Securities Americas LLC, according to market sources.

Ableco Capital priced $26 million of class A-R revolving loans (Aaa/AAA/) at Libor plus 220 bps, which step up to Libor plus 290 bps after the first two years.

The CLO sold $312.85 million of class A-T loans (Aaa/AAA/) at Libor plus 215 bps; $65.56 million of class B deferrable loans (A2) at Libor plus 475 bps; $25.78 million of class C deferrable loans (Baa2) at Libor plus 600 bps and a $159.11 million equity tranche.

Ableco Finance LLC, an affiliate of New York-based investment firm Cerberus Capital Management LP, will manage the CLO.

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