KKR sells $519.4 million CLO; June sees $2 billion deals so far; triple As price wider

By Cristal Cody

Tupelo, Miss., June 6 - About $2 billion of collateralized loan obligations have priced in June through Thursday, according to market sources.

KKR Financial CLO 2013-1, Ltd./KKR Financial CLO 2013-1, LLC sold $519.4 million of notes due June 16, 2025, with the triple A-rated tranche priced at Libor plus 115 bps, informed sources said.

Earlier in the week, Trimaran Advisors, LLC brought the $465 million Catamaran CLO 2013-1 Ltd./Catamaran CLO 2013-1 LLC deal, which included $277.8 million of class A floating-rate notes (Aaa) priced at Libor plus 115 bps, according to a market source.

The rest of the capital structure in new CLOs remains well-placed, a source said.

Triple B-rated and double B-rated tranches currently are most in demand from investors, the source said.

"Almost the entire capital structure remains well-bid besides triple A," the source said. "A lot of regulations are floating around and that drove investors to go lower in the capital structure. There's definitely widening a little bit."

OZLM Funding IV, Ltd., managed by Och-Ziff Loan Management LP, a part of hedge fund manager Och-Ziff Capital Management Group LLC, also sold a $600 million CLO over the week via Merrill Lynch, Pierce, Fenner & Smith Inc., according to market sources. Pricing terms were not available by press time.

Other deals remain on the calendar, such as Carlyle Investment Management LLC's $500 million CLO, the $412 million Anchorage Capital CLO 2013-1, Ltd./ Anchorage Capital CLO 2013-1, LLC transaction and an offering from Boston-based Sankaty Advisors LLC.

Volatility is expected across the financial markets on Friday with the widely anticipated Labor Department's May non-farm payroll report on tap, according to sources. The government is forecast to report an increase of about 165,000 jobs.

"We've seen a tremendous amount of volume in the secondary markets in CLOs, but we think a lot of that is driven by hedge funds that want to take returns before tomorrow's number," a source said.

KKR prices $519.4 million

KKR Financial CLO 2013-1 sold $519.4 million of notes due June 16, 2025 in seven tranches, according to market sources.

The $311.5 million tranche of class A-1 senior secured floating-rate notes (Aaa) priced at Libor plus 115 bps.

Citigroup Global Markets Inc. arranged the offering, and KKR Capital Markets LLC was the placement agent.

KKR Financial Advisors II, LLC will manage the cash-flow CLO.

The transaction is the second syndicated CLO deal that parent company New York-based KKR Financial Holdings LLC has sold since the financial crisis. The $412 million KKR Financial CLO 2012-1, Ltd. priced in December.

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