Trimaran sells $465 million; June pipeline forecast; tight CLO spreads may tarnish popularity

By Cristal Cody

Tupelo, Miss., June 4 - Trimaran Advisors, LLC priced its $465 million collateralized loan obligation fund, while Anchorage Capital Group, LLC firmed details for a $412 million CLO deal, one of several deals expected to price over the June 3 week, according to market sources.

While CLOs have enjoyed a resurgence in popularity and spreads have been tightening, the trend could reverse if loan spreads - and thus CLOs - tighten, particularly the AAA-rated tranches, according to market sources.

Debt investors are unwilling to accept considerably lower coupons than where deals are currently pricing, and if the relative value goes away, issuance could be impacted, one source said.

"At current levels, CLOs offer tremendous relative value," the source said.

"If loan spreads do tighten and CLO spreads inevitably have to tighten in order to maintain attractive equity arbitrage for the deal, then the worry is investors will, at the triple A level, get out of CLOs and shift their preference to perhaps other triple A structured products."

Triple A rated CLOs reached the tightest spreads since 2008 in February, then widened slightly in March and April and tightened in May and early June to the Libor plus 110 basis points area.

"Other structured product spreads have not significantly declined, so if just CLOs tightened, they look relatively less attractive," the source added.

Catamaran CLO 2013-1 prices

Trimaran, the CLO manager and portfolio company of KCAP Financial, Inc., sold $465 million in the Catamaran CLO 2013-1 Ltd. deal, upsized from initial estimates of $413.8 million.

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

Additional pricing terms were not available by press time.

The deal is the second CLO fund that the New York-based firm has brought since it was acquired by KCAP in 2012.

Anchorage Capital preps

Anchorage Capital Group is expected to bring its $412 million CLO over the June 3 week, according to market sources.

The Anchorage Capital CLO 2013-1, Ltd./ Anchorage Capital CLO 2013-1, LLC deal includes $236 million of class A-1 senior secured floating-rate notes (Aaa//AAA) talked at Libor plus 119 basis points; $47.7 million of class A-2a senior secured floating-rate notes (Aa2//) talked at Libor plus 175 bps and $10 million of class A-2b senior secured fixed-rate notes (Aa2//) talked to price with a 3.429% coupon.

The sale also includes $20.8 million of class B senior secured deferrable floating-rate notes (A2//) talked at Libor plus 275 bps; $28.2 million of class C senior secured deferrable floating-rate notes (Baa3//) talked at Libor plus 360 bps; $25.9 million of class D secured deferrable floating-rate notes (Ba3//) talked at Libor plus 480 bps; $7.4 million of class E secured deferrable notes talked at Libor plus 550 bps and a $36 million tranche of subordinated notes.

JPMorgan Securities, LLC is the placement agent.

The cash-flow CLO will be managed by New York-based Anchorage Capital Group.

Proceeds from the deal will be used to purchase a leveraged loan portfolio.

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