Palmer Square brings shorter-duration CLO; NewStar prices $348.4 million; secondary limited

By Rebecca Melvin

New York, April 24 - Palmer Square CLO 2014-1 priced $405.5 million of notes in a collateralized loan obligation this week with an eight-year maturity, a 1.1-year reinvestment period and a 1.1-year non-call period to July 17, 2015, according to an informed source.

The shorter duration is in contrast to a typical CLO with a four-year reinvestment period, a two-year non-call period and a longer maturity, and it may be something of a trend as investors look for shorter time horizons amid expectations that spreads will be coming in within the next 12 to 18 months.

Meanwhile, NewStar Financial Inc. has priced $348.4 million of notes due April 2025 in the NewStar Commercial Loan Funding 2014-1 LLC collateralized loan obligation, which was upsized from $325 million due to strong investor interest, according to a news release.

New deal flow resumed Thursday following curtailed activity earlier in the week due to a CLO conference in New York, market sources said. Nevertheless, there was some marketing through the conference, which speaks to the strength of the current CLO market, one source said.

Secondary market trading was limited, which is the norm for CLOs.

Palmer brings shorter CLO

Palmer Square's $405.5 million CLO has $256 million of class A-1 senior secured floating-rate notes (Aaa/AAA) at Libor plus 127 basis points at the top of the deal structure.

BofA Merrill Lynch arranged the deal, which is set to close next week.

Palmer Square Capital Management LLC, an investment management firm based in Leawood, Kan., is the CLO manager.

NewStar prices $348.4 million

The CLO issued by NewStar Financial, $348.4 million of notes due April 2025, represents the company's eighth securitization.

The blended pricing of the notes was Libor plus 232 bps.

The CLO priced $202.5 million of class A senior secured floating-rate notes at Libor plus 180 bps, $20 million of class B-1 senior secured floating-rate notes at Libor plus 260 bps, $13.3 million of class B-2 senior secured fixed-rate notes at 490 bps, $30.3 million of class C secured deferrable floating-rate notes at Libor plus 360 bps and $23.5 million of class D senior deferrable floating-rate notes at Libor plus 475 bps.

NewStar also priced $18.5 million of class E notes at Libor plus 600 bps, $14 million of class F notes at Libor plus 650 bps and equity.

Wells Fargo Securities LLC was the placement agent.

Boston-based NewStar Financial will manage the CLO.

The CLO has a four-year reinvestment period.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.