NewStar prices $348 million in year’s first middle-market CLO; AAAs active in secondary

By Cristal Cody

Tupelo, Miss., Feb. 17 – NewStar Financial, Inc. brought the year’s first middle-market backed CLO deal.

The CLO manager sold $348,006,000 of notes in the small-to-middle enterprise CLO.

NewStar was last in the CLO primary market in September with the $397.81 million NewStar Commercial Loan Funding 2015-2 LLC deal.

Supply remains thin in the U.S. and European primary markets.

BofA Merrill Lynch announced that it lowered its 2016 volume forecast to $45 billion from $70 billion.

CLO managers have priced $826 million in two broadly syndicated CLO deals year to date.

In secondary trading on Wednesday, activity was seen in AAA-rated CLO notes, according to a market source.

NewStar prices $348 million

NewStar Financial sold $348,006,000 of notes due Feb. 25, 2028 in the NewStar Commercial Loan Funding 2016-1 LLC transaction, according to a market source.

NewStar Commercial Loan Funding 2016-1 priced $176.5 million of class A-1 senior secured floating-rate notes at Libor plus 230 basis points and $20 million of 3.44% class A-2 senior secured fixed-rate notes in the senior tranches.

Wells Fargo Securities, LLC arranged the deal.

NewStar Financial will manage the CLO.

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

The transaction is backed primarily by small- and medium-enterprise loans.

Proceeds from the deal will be used to purchase a $350 million portfolio of middle-market loans.

NewStar Financial, a Boston-based middle-market commercial lender, priced three CLO transactions in 2015.

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