GSO prices AA-rated tranche at tightest post-financial crisis level; June pipeline forecast

By Cristal Cody

Tupelo, Miss., May 31 - May collateralized loan obligation issuance ended stronger with four new deals priced over the final week of the month, according to market sources on Friday.

GSO Capital Partners LP, credit arm of the Blackstone Group LP, sold the $515 million Tryon Park CLO, with the triple A tranche priced at Libor plus 112 basis points and the AA rated tranche priced at Libor plus 155 bps, the tightest AA print since the financial crisis, an informed source said.

GSO/Blackstone Debt Funds Management LLC is the CLO manager.

Additional details on the deal were not available by press time.

HillMark Capital Management, LP also priced the $421 million NewMark Capital Funding 2013-1 CLO over the week, a source said. Final details were not immediately available.

"The late May CLO activity was particularly welcome given the [two-plus] week lull in new deals coming to market, which some market participants have taken as evidence of the adverse effects of the recent FDIC assessment rule change," Barclays analysts said in a note on Friday.

The Federal Deposit Insurance Corp.'s deadline for new rules for banks that require CLOs be treated as higher-risk assets went into effect on April 1.

"April and May have produced just $8 billion in CLO volume combined, a significant drop from the $12+ billion that priced in March alone, immediately ahead of the rule change," the Barclays analysts said. "While this is the slowest pace of issuance since July of last year, the relatively robust forward calendar suggests that the lull will not persist indefinitely."

In fact, Standard & Poor's announced that it has more than $15 billion of CLOs in the rating process.

"That's a pretty encouraging sign there's a lot more deals out there to be done," a market source said on Friday. "The month ended really strong with four CLOs priced this week for a total of $1.8 billion of volume."

The first half of the month saw a lull in deals, while the activity in the final week pushed the month's total up to $4 billion, a source said. More than $34 billion of CLO deals have priced year-to-date.

June deal calendar

Several deals are expected to price in the first couple of weeks of June, including Carlyle Investment Management LLC's $500 million CLO, according to sources.

Citigroup Global Markets Inc. is the placement agent.

Carlyle Group LP also is expected to price a €300 million European CLO.

Also ahead, KKR Financial CLO 2013-1 is expected to price a $400 million CLO.

Citigroup Global Markets Inc. is the arranger and KKR Capital Markets LLC is the placement agent.

KKR Financial Advisors II, LLC will manage the cash-flow CLO.

Meanwhile, Anchorage Capital CLO 2013-1, Ltd./ Anchorage Capital CLO 2013-1, LLC has plans to sell $412 million of notes.

The deal includes $236 million of class A-1 notes (//AAA); $57.7 million of class A-2 notes; $20.8 million of class B notes; $14.3 million of class C notes; $7.9 million of class D notes; $6 million of class E notes and $36 million of subordinated notes.

JPMorgan Securities, LLC is the placement agent.

The cash-flow CLO will be managed by New York-based Anchorage Capital Group, LLC.

Proceeds from the deal will be used to purchase a leveraged loan portfolio.

A deal from Boston-based Sankaty Advisors LLC via BofA Merrill Lynch also is in the works for early June, according to a market source.

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