Interest in U.S. CLOs strong; new details emerge for Napier Park, Tall Tree CLO deals

By Cristal Cody

Tupelo, Miss., March 17 - More than $18 billion of collateralized loan obligation transactions are in the pipeline, with the rest of the month expected to see steady issuance, according to informed sources on Monday.

Details emerged for two new CLO offerings.

Napier Park Global Capital LLC brought the AAA-rated securities in a CLO transaction at Libor plus 152 basis points, while Tall Tree Investment Management, LLC placed the AAA tranche in the Tuolumne Grove CLO 2014-1 Ltd. deal at Libor plus 150 bps, according to market sources.

"Investors find the spreads of roughly 150 basis points over Libor for Aaa CLO paper attractive compared to other, similarly rated structured obligations," Moody's Investors Service said in its March report of CLOs following a global bond conference and a round of investor meetings in Tokyo in late February.

"Investments in U.S. CLOs are likely to remain attractive this year," Moody's said. "We met with current U.S. CLO 2.0 investors, as well as several firms that intend to return to, or initiate investment in, the U.S. CLO 2.0 market. Institutions include banks and insurance firms, which typically buy Aaa-rated tranches."

Napier Park prices CLO

Napier Park Global Capital priced the $492.36 million Regatta III Funding LP/Regatta III Funding LLC CLO via Citigroup Global Markets Inc., according to an informed source.

The CLO priced $244.5 million of class A-1A floating-rate notes at Libor plus 152 bps; $50 million of class A-1 floating-rate loans at Libor plus 147 bps; $59.38 million of class A-2 floating-rate notes at Libor plus 210 bps; $30.88 million of class B floating-rate notes at Libor plus 285 bps; $26.13 million of class C floating-rate notes at Libor plus 345 bps; $26.13 million of class D floating-rate notes at Libor plus 490 bps and $10.69 million of class E floating-rate notes at Libor plus 550 bps.

The deal included $44.65 million of subordinated notes in the equity tranche.

Napier Park Global Capital will manage the arbitrage cash flow CLO.

The notes and series A-1 loans are due April 15, 2026.

Proceeds from the deal will be used to purchase a portfolio of about $475 million of leveraged loans.

The firm priced the $371 million Regatta II Funding LP/Regatta II Funding LLC transaction in February 2013.

Napier Park Global Capital is a global alternative asset manager based in New York City.

Tall Tree taps market

Tall Tree Investment Management placed the $408.5 million of Tuolumne Grove CLO via Guggenheim Securities, LLC and Jefferies LLC, according to an informed source.

The CLO priced $4 million of class A-X floating-rate notes at Libor plus 140 bps; $232 million of class A-1 floating-rate notes at Libor plus 150 bps; $15 million of class A-2A floating-rate notes at Libor plus 142 bps and $3 million of class A-2B floating-rate notes at Libor plus 165 bps at the top of the capital structure.

The CLO also sold $47 million of class B floating-rate notes at Libor plus 210 bps; $20 million of class C floating-rate notes at Libor plus 285 bps; $20 million of class D floating-rate notes at Libor plus 365 bps; $23 million of class E floating-rate notes at Libor plus 475 bps and $44.5 million of subordinated notes in the equity tranche.

Tall Tree Investment Management, an investment advisement firm based in Chicago, will manage the arbitrage cash flow CLO.

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