Neuberger Berman prices $572 million CLO; pipeline grows; middle-market issuance to slow

By Cristal Cody

Tupelo, Miss., Feb. 12 - Issuance in the collateralized loan obligation market picked up for the week with a $572 million deal from Neuberger Berman Fixed Income LLC, according to market sources on Wednesday.

Neuberger Berman priced the AAA tranche at Libor plus 147 basis points, in line with recent triple A issuance in the Libor plus 150 bps area, a source said.

About $15 billion of broadly syndicated and middle-market CLO transactions are in the pipeline, up from about $13.6 billion, according to a market source.

The middle-market CLO sector is forecast to bring about $3.9 billion of the $60 billion in total U.S. CLO deals predicted for 2014, fewer than what priced in 2013 or 2012, according to a Wells Fargo Securities, LLC report.

The middle-market CLO sector saw 14 deals totaling $5.4 billion price in 2013, which represented 6.5% of U.S. CLO issuance for the year, according to the report from Wells Fargo senior analyst Dave Preston and associate analyst Jason McNeilis.

In 2012, middle-market CLO issuance was $4.5 billion, or 8% of the annual deal total.

"In general, middle-market CLO AAA tranches priced 25 bps-50 bps wider than BSL CLOs during 2013," the report said. "December 2013 saw somewhat wider spreads, as middle-market CLO AAA tranches priced in the 185 bps-200 bps range, compared to 145 bps-155 bps for BSL CLOs."

Neuberger Berman prices

Neuberger Berman Fixed Income priced $572 million of notes due 2026 in the Neuberger Berman CLO XVI, Ltd./Neuberger Berman CLO XVI, LLC transaction, according to a market source.

The CLO sold $4 million of class X senior secured floating-rate notes (Aaa) at Libor plus 100 bps; $275.5 million of class A-1 senior secured floating-rate notes (Aaa) at Libor plus 147 bps; $60 million of 3.51% class A-2 senior secured fixed-rate notes (Aaa); $50 million of class B-1 senior secured floating-rate notes at Libor plus 200 bps and $18.75 million of 4.31% class B-2 senior secured fixed-rate notes at the top of the capital structure.

The CLO also sold $41.5 million of class C-1 mezzanine secured deferrable floating-rate notes at Libor plus 260 bps; $1 million of 5.36% class C-2 mezzanine secured deferrable fixed-rate notes; $33.75 million of class D mezzanine secured deferrable floating-rate notes at Libor plus 335 bps; $25.5 million of class E junior secured deferrable floating-rate notes at Libor plus 420 bps; $12.5 million of class F junior secured deferrable floating-rate notes at Libor plus 470 bps and $49.5 million of subordinated notes.

Morgan Stanley & Co. LLC arranged the deal.

The CLO will be managed by Neuberger Berman Fixed Income.

Neuberger Berman priced two CLO deals in 2013 that included the $413.19 million Neuberger Berman CLO XIV, Ltd./Neuberger Berman CLO XIV, LLC deal in May and the $412.21 million Neuberger Berman CLO XV, Ltd./Neuberger Berman CLO XV, LLC transaction in September.

The Chicago-based firm is part of the Neuberger Berman Group, LLC.

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