CLO market in wait-and-see mode amid broader market volatility; Palmer Square CLO prices

By Rebecca Melvin

New York, July 7 – Activity in the primary and secondary markets for collateralized loan obligations has been significantly curtailed as a result of macroeconomic tensions related to the Greek debt crisis and the correction in China’s stock markets, an informed source said on Tuesday.

“It’s fair to say that as a consequence of Greece and China, things have slowed substantially,” the source said.

The secondary market was essentially moribund and pricing was obtained for only one CLO new issue.

Palmer Square Capital Management LLC priced $408.15 million of notes due July 20, 2027 in a CLO of eight tranches. Of the two AAA-rated tranches, one has a floating-rate spread of Libor plus 150 basis points and the other small, fixed-rate tranche was priced at a rate of 3.338%.

In addition, Prudential Investment Management Inc. was reported to have priced a CLO in the last few days with a spread of Libor plus 140 bps for the top-rated tranche.

Pricing details for the Prudential CLO could not be obtained by Prospect News’ deadline. But a source said that it was likely that the CLO was only able to get done in the current market environment because Prudential is a very well-known manager.

In the broader markets, stocks reversed early losses to close in positive territory. Bonds were up again, but only slightly higher.

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