Telos resets $476.1 million CLO; THL refinances 2015 tranches; primary mezzanine spreads firm

By Cristal Cody

Tupelo, Miss., Aug. 11 – CLO refinancing issuance continues to be steady with two more managers refinancing vintage deals.

Telos Asset Management LLC sold $476.1 million of notes in a refinancing and reset of a 2013 CLO.

THL Credit Advisors LLC affiliate THL Credit Senior Loan Strategies LLC priced $456 million of notes in two tranches from a 2015 deal.

More than $111 billion of CLOs been refinanced year to date, according to BofA Merrill Lynch.

New CLO issuance also remains strong with $68 billion of volume year to date, “nearly double” the year-to-date issuance in 2016 of $35 billion, Wells Fargo Securities, LLC analysts said in a note on Friday.

“While CLO supply often matches demand, which limits spread tightening, we notice spread tightening in two parts of the CLO capital stack despite the huge uptick in volume,” the Wells Fargo analysts added. “CLO AAA spread tiering has compressed notably to a 5 [basis points]-6 [bps] gap between benchmark prints and the widest prints since April, when the gap was 10 bps-15 bps.”

Also, senior mezzanine spreads have tightened in the primary market.

“Since the end of Q2, single-A spreads have tightened 15 bps to 220 bps, and BBB spreads have moved in 25 bps-30 bps to 320 bps,” the analysts said.

Telos 2013-3 resets

Telos Asset Management priced $476.1 million of notes in a refinancing and reset of the Telos 2013-3, Ltd./Telos 2013-3 LLC CLO offering, according to a market source and a notice of executed second supplemental indenture and executed third supplemental indenture on Thursday.

The CLO sold $295.9 million of class A-R senior secured floating-rate notes at Libor plus 130 bps at the top of the capital structure.

BNP Paribas Securities Corp. was the refinancing placement agent.

The class X notes are due July 17, 2019, while the remaining tranches in the CLO mature July 17, 2026.

Proceeds will be used to redeem the original CLO notes that were issued on Feb. 26, 2013.

Credit manager Telos Asset Management is a subsidiary of New York-based Tiptree Financial Inc.

THL refinances $456 million

THL Credit Senior Loan Strategies priced $456 million of notes in two tranches from the THL Credit Wind River 2015-1 CLO Ltd./THL Credit Wind River 2015-1 LLC transaction, according to a market source and a notice of executed second supplemental indenture on Thursday.

The CLO priced $384 million of the class A-R senior secured floating-rate notes due July 20, 2027 (Aaa//AAA) at Libor plus 105 bps.

Credit Suisse Securities (USA) LLC was the refinancing underwriter.

In the original $616.25 million transaction issued on July 9, 2015, the CLO sold the class A notes at Libor plus 150 bps.

Proceeds were used to redeem the original class A and B notes.

THL Credit Advisors has priced two new CLOs and refinanced three vintage CLOs year to date.

The Boston-based alternative credit investment firm priced two new CLOs and one refinanced CLO in 2016.

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