Market focuses on oil and gas; THL prices $408.68 million; AXA brings $412.25 million CLO

By Cristal Cody

Tupelo, Miss., Dec. 19 – Demand for CLOs remains strong as the year winds down despite market volatility from the oil and gas sector with new issuance from AXA Investment Managers Inc. and THL Credit Advisors LLC, according to informed sources on Friday.

“With only a few trading sessions before the end of the year, we expect the market focus to remain on oil,” Barclays’ analysts said in a note. “If it rebounds, or even settles into a range at or near current levels, the recent decompression between loans and bonds would likely partially reverse.”

CLO AAA-rated notes were unchanged on the month at Libor plus 160 basis points in the secondary market, while BBBs have widened 10 bps from November, according to a Wells Fargo Securities, LLC report on Friday.

A-rated notes are ending the month 10 bps tighter.

“Hopes for a quiet year-end were somewhat dashed by the broad risk-off move,” Wells Fargo Securities senior analyst Dave Preston and associate analyst Jason McNeilis said in the note.

“In general, the CLO market appears to be avoiding any over-reaction, but spreads did have a wider bias, and tiering between deals increased,” the analysts said. “Despite volatility in the loan market, demand continues to remain strong for CLOs as we approach the end of the year.”

Compared to 2013, year-to-date CLO issuance through mid-December has increased $39.5 billion, according to Wells Fargo.

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