Octagon refinances CLO; deal pace anticipated to surpass pre-financial crisis totals

By Cristal Cody

Tupelo, Miss., April 28 - Nearly $33 billion of CLOs have priced year to date and another $17 billion of deals are in the pipeline, according to market sources.

About 36 CLO transactions are in the works, a source said.

"At this pace, CLO supply for the full year would come in at $105 billion, eclipsing 2006 and 2007 totals and far outstripping the roughly $50 billion in supply that we estimate is needed to offset negative net supply from deals amortizing," Barclays analysts said in a note.

Octagon refinances CLO

Octagon Credit Investors, LLC priced $358.2 million of notes due May 5, 2023 in a refinancing of the Octagon Investment Partners XII Ltd. 2012-1/Octagon Investment Partners XII LLC deal first brought in 2012, according to an informed source.

The CLO priced $223 million of class A senior secured floating-rate notes (Aaa//AAA) at Libor plus 127 basis points; $22 million of class B-1 senior secured floating-rate notes (/AA/) at Libor plus 190 bps; $22 million of 1.9% class B-2 senior secured fixed-rate notes (/AA/); $18.5 million of 2.8% class C secured deferrable fixed-rate notes (/A/); $17.5 million of class D secured deferrable floating-rate notes (/BBB/) at Libor plus 380 bps and $18 million of class E secured deferrable floating-rate notes (/BB-/) at Libor plus 550 bps.

The deal included $7.25 million of series S subordinated notes and $29.95 million of series J subordinated notes.

Citigroup Global Markets Inc. arranged the refinancing.

Octagon Credit Investors will manage the CLO. The vehicle is collateralized by broadly syndicated first-lien senior secured corporate loans.

Octagon Credit Investors was in the market with the $566.88 million Octagon Investment Partners XIX Ltd./Octagon Investment Partners XIX LLC deal in March. The firm brought four CLO deals in 2013.

New York-based Octagon is an affiliate of CCMP Capital Advisors, LLC.

Arbor Realty Trust prices CLO

Arbor Realty Trust, Inc. announced on Monday that it closed on a $375 million CLO that was issued by two newly formed subsidiaries in a private placement offering.

The company reported that about $281 million of investment-grade-rated debt was issued. Arbor retained a $94 million equity interest in the CLO portfolio.

The notes have a weighted average spread of Libor plus 239 bps.

Sandler O'Neill + Partners, LP was the lead placement agent. Chalkhill Partners, LLP was the European co-placement agent.

The $375 million of collateral includes about $68 million of additional capacity to finance future loans for a period of up to 120 days from the closing date of the CLO.

The facility has a two and a half year replenishment period that allows the principal proceeds from repayments of the collateral assets to be reinvested in qualifying replacement assets.

The notes are secured by a portfolio of real estate-related assets consisting primarily of first mortgage bridge loans and cash with a face value of $375 million.

Uniondale, N.Y.-based Arbor Realty Trust will use the proceeds to repay debt under its current credit facilities and to fund future loans and investments.

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