Shenkman sells $419.1 million Sudbury Mill CLO; U.S. issuance climbs to nearly $70 billion

By Cristal Cody

Tupelo, Miss., Nov. 15 - Shenkman Capital Management, Inc. priced $419.1 million of notes in the Sudbury Mill CLO Ltd./Sudbury Mill CLO LLC offering, which brings year-to-date issuance in the U.S. CLO primary market to more than $69 billion, according to market sources on Friday.

Looking forward, about $14 billion of CLO transactions remain in the deal pipeline, one source said.

Shenkman priced the major AAA portion of the CLO at Libor plus 145 basis points and the notes at the bottom of the capital structure at Libor plus 475 bps, in line with continued weakness seen in AAA notes, sources said.

Sankaty Advisors LLC's recently priced $514.16 million Avery Point III CLO Ltd./Avery Point III CLO Corp. transaction placed the AAA slice at Libor plus 140 bps and the BB tranche at Libor plus 500 bps, according to a market source.

"New CLO issuance has been sluggish lately because of wide AAA spreads and a correspondingly challenging arb," Barclays analysts said in a note on Friday.

Shenkman taps market

Shenkman Capital Management sold $419.1 million of notes due Jan. 17, 2026 in the Sudbury Mill CLO deal via Merrill Lynch, Pierce, Fenner & Smith Inc., according to an informed source.

The CLO sold $2.6 million of class X senior secured floating-rate notes (//AAA) at Libor plus 100 bps; $200 million of class A-1 senior secured floating-rate notes (//AAA) at Libor plus 145 bps; $50 million of class A-2 senior secured floating-rate notes (//AAA) at Libor plus 140 bps; $38 million of class B-1 floating-rate notes at Libor plus 220 bps; $15 million of 4.41% class B-2 fixed-rate notes; $24.5 million of class C floating-rate notes at Libor plus 300 bps; $25 million of class D floating-rate notes at Libor plus 350 bps; $18 million of class E floating-rate notes at Libor plus 475 bps and $46 million of subordinated notes.

The CLO manager is Shenkman Capital Management.

The New York-based investment firm plans to use the proceeds to purchase a portfolio of about $400 million of primarily senior secured leveraged loans.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.