NXT Capital prices $357.45 million CLO; secondary market quiet to unchanged

By Rebecca Melvin

New York, April 22 - NXT Capital CLO 2014-1 LLC has priced a $357.45 million collateralized loan obligation transaction, according to a source Tuesday.

NXT Capital brought $188.75 million of AAA-rated notes at Libor plus 175 basis points at the top of the capital structure. NXT tapped the market last year at this time.

CLO primary issuance remains strong with more than $28 billion in new dollar-denominated deals priced so far this year, compared to $21.5 billion for the same period of 2013, according to Prospect News data.

The secondary market was quiet to unchanged on Tuesday, a New York-based CLO trader said. Not only were many market players attending the Information Management Network conference on CLOs and Leveraged Loans in New York on Tuesday, which was keeping a lid on activity, but the CLO secondary market is a "lagging market" that has been steady to unchanged recently in line with rates and other credit conditions.

At the conference, market players discussed topics like relative value, structural characteristic and collateral quality of deals, as well as assessed the liquidity of the secondary market. Regulatory factors like the Volker rule were also front and center on the agenda.

NXT Capital prices $357.45 million

The deal included five tranches of floating-rate notes, one tranche of fixed-rate notes and one tranche of subordinated notes.

NXT Capital, a small- to medium-enterprise cash-flow CLO, priced $188.75 million of class A notes (/AAA/) at Libor plus 175 bps; $24 million of class B-1 notes (/AA/) at Libor plus 250 bps; $5 million of class B-2 notes (/AA/) at 4.756%; $37.25 million of class C notes (not rated) at Libor plus 350 bps; $16 million of class D notes at Libor plus 400 bps; $32 million of class E notes at Libor plus 550 bps; and $54.449 million of non-rated subordinated notes with a residual coupon.

Wells Fargo Securities LLC was the underwriter.

The CLO manager is NXT Capital Investment Advisors, LLC.

The non-call period for the notes ends April 2016.

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