KKR, Oaktree price new issue CLOs; Ares refinances $465 million 2016 notes; spreads steady

By Cristal Cody

Tupelo, Miss., April 1 – Deal volume revved up in the week ahead of the end of the first quarter in the CLO primary market.

KKR Financial Advisors II, LLC priced an upsized $452 million of notes due April 15, 2032 in the KKR CLO 25 Ltd./KKR CLO 25 LLC transaction on Thursday, according to a market source.

The deal was upsized from $406.3 million. Final pricing details were not immediately available.

GreensLedge Capital Markets LLC was the placement agent.

The transaction is expected to close May 14.

KKR, an investment firm and subsidiary of San Francisco-based KKR Credit Advisors (US) LLC, has priced two new CLOs year to date.

Oaktree Capital Management LP also brought an upsized $744.78 million of notes due April 22, 2030 in a new CLO offering via Wells Fargo Securities, LLC on Wednesday, according to a market source.

The Oaktree CLO 2019-1 Ltd./Oaktree CLO 2019-1 LLC deal was upsized from $732.2 million.

The transaction is expected to close April 25. Final pricing details were not immediately available.

Oaktree has priced one new CLO and one refinanced CLO year to date.

The Los Angeles-based asset management firm is a subsidiary of Oaktree Capital Group, LLC.

In other primary action, Ares Management LLC priced $465 million of notes in a refinancing and reset of a vintage 2016 CLO.

Deal volume totaled $4.5 billion in the primary market over the last week of March, in the “biggest” deal volume week seen since February 2018, according to a BofA Merrill Lynch research note released on Monday.

About $28 billion of broadly syndicated CLOs have priced year to date. CLO managers have refinanced more than $9 billion of vintage CLOs so far this year.

CLO primary spreads remain mostly steady with AAA spreads ending March about 2 basis points wider from a month ago, the note said.

Ares resets XXXIX CLO

Ares Management priced $465 million of notes in a refinancing and reset of the vintage Ares XXXIX CLO, Ltd. transaction, according to a market source and a notice of proposed first supplemental indenture and proposed second supplemental indenture.

In the senior floating-rate tranches, the CLO sold $5 million of class X-R notes at Libor plus 65 bps, $304 million of class A-1-R notes at Libor plus 133 bps, $21 million of class A-2-R notes at Libor plus 153 bps and $55 million of class B-R notes at Libor plus 185 bps.

J.P. Morgan Securities LLC was the refinancing placement agent.

The reset notes are due April 18, 2031.

In the original offering of notes due July 18, 2028 that were issued July 27, 2016, the CLO sold senior tranches that included $5 million of class X floating-rate notes at Libor plus 120 bps, $325 million of class A floating-rate notes at Libor plus 153 bps and $55 million of class B floating-rate notes at Libor plus 200 bps.

Proceeds will be used to redeem the outstanding notes.

Ares Management is an alternative asset management firm based in Los Angeles.

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