Neuberger Berman sells $569.75 million CLO; June supply near $10 billion; pipeline steady

By Cristal Cody

Tupelo, Miss., June 20 – CLO issuance slowed over the week but remains robust with nearly $10 billion of deals already priced in June, according to market sources on Friday.

“CLO issuance has been $56 billion year to date, a pace that outstrips the record annual total [of $99 billion in 2007] by more than 20%,” Barclays analysts said in a note. “Middle-market CLO growth has also been solid.”

Neuberger Berman Fixed Income LLC bumped up the monthly total with a $569.75 million CLO transaction, according to a market source on Friday.

The CLO priced the AAA-rated notes at Libor plus 147 basis points.

Morgan Stanley & Co. LLC arranged the deal in its second CLO transaction of the week.

Covenant Credit Partners LLC priced the $527.5 million Covenant Credit Partners CLO I Ltd./Covenant Credit Partners CLO I LLC offering on Wednesday via Morgan Stanley, according to a market source. The CLO placed the AAA tranche at Libor plus 148 bps.

About $12.7 billion of CLOs are in the pipeline, a source said on Friday.

Neuberger Berman prices

Neuberger Berman Fixed Income sold $569.75 million of notes due Aug. 15, 2025 in the Neuberger Berman CLO XVII, Ltd./Neuberger Berman CLO XVII, LLC transaction, according to a market source.

The CLO priced $4 million of class X senior secured floating-rate notes (Aaa/AAA/) at par to yield Libor plus 100 bps and $338.25 million of class A senior secured floating-rate notes (Aaa/AAA/) at par to yield Libor plus 147 bps.

The CLO sold $74.25 million of class B senior secured floating-rate notes (/AA/) at par to yield Libor plus 210 bps; $41.25 million of class C deferrable floating-rate notes (/A/) at 97.15 to yield Libor plus 276 bps; $28,875,000 of class D deferrable floating-rate notes (/BBB-/) at 94.77 to yield Libor plus 355 bps; $23,125,000 of class E-1 deferrable floating-rate notes (/BB-/) at 89.91 to yield Libor plus 475 bps and $3 million of class E-2 deferrable floating-rate notes (/BB-/) at 94.64 to yield Libor plus 550 bps.

The deal also included $57 million of subordinated notes.

Morgan Stanley was the placement agent.

Neuberger Berman Fixed Income will manage the CLO, which is backed primarily by a revolving pool of broadly syndicated senior secured loans.

The CLO has a two-year non-call period and a four-year reinvestment period.

Neuberger Berman was last in the primary market on Feb. 11 with the $572 million Neuberger Berman CLO XVI, Ltd./Neuberger Berman CLO XVI, LLC transaction.

The Chicago-based firm, part of Neuberger Berman Group, LLC, brought two CLO deals in 2013.

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