Angelo Gordon, Eaton Vance prepare CLO deals for 2013; bottom CLO tranches tightening

By Cristal Cody

Tupelo, Miss., Aug. 27 - Angelo, Gordon & Co. and Eaton Vance Corp. are expected to price CLO transactions later in the year, according to informed sources on Tuesday.

The deal will be Angelo, Gordon's first collateralized loan obligation offering in 2013.

Eaton Vance is considering pricing two CLO deals before the year is over.

The firms have both "been out for a while" with marketing on the deals, one source said.

New CLO AAA-rated tranches are pricing on average at the Libor plus 133 basis points area in August "for top-tier managers," a market source said, and "wider than 140 [bps over Libor] for lesser-known managers."

Higher-rated CLO spreads have been stuck over much of the summer, according to market sources.

"Since the end of June, they've basically been at the same level," one source said. "The investor base is very thin at the top of the capital structure, and they're demanding wider spreads to compensate them for the fact that long-term rates have risen. The top part hasn't moved at all, but everything else has tightened."

Lower-rated CLO tranches are reaching tights seen earlier in the year, the market source said.

"Almost every tranche has tightened from the wider points in June and July, and we're getting close to the levels we were in February and March," the source said. "The tightest levels were in May of this year - we're not there yet, but we're approaching it."

Angelo Gordon to market CLO

Angelo, Gordon's CLO will price via Morgan Stanley & Co. LLC, a source said.

The New York City-based alternative investment manager last brought a CLO deal in November when it priced the $625 million Northwoods Capital IX, Ltd. transaction.

Eaton Vance plans CLO deals

Eaton Vance is expected to bring a CLO offering in the coming months and possibly another deal this year, according to an informed source and the Boston-based investment management firm.

The company reported during its third-quarter earnings conference call on Aug. 21 that it has a couple of CLO transactions in the works.

"We have been having discussions again as that market has picked up again," Thomas E. Faust Jr., chairman, chief executive officer and president of Eaton Vance, said on the call.

"We haven't done any transactions, but we have a couple of deals that are in process, but nothing that's really looking absolutely definitive at this time," he said. "In both cases, we think there is a reasonable prospect we can do deals before the end of the year, but that's certainly not an absolute."

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