CLOs remain tight; spreads range 140 bps to 177 bps to date; use of back-up managers up

By Cristal Cody

Tupelo, Miss., March 5 – CLO spreads remain tight in the primary market, sources report.

Voya Alternative Asset Management LLC’s $612.5 million Voya CLO 2015-1, Ltd./Voya CLO 2015-1 LLC transaction priced earlier in the week placed the AAA-rated notes at Libor plus 148 basis points, on the tight side of recent issuance.

The tightest AAA prints of the year have been at Libor plus 140 bps, according to market sources.

GSO/Blackstone Debt Funds Management LLC’s $509.5 million Dorchester Park CLO Ltd./Dorchester Park CLO LLC priced the AAA tranche of notes at Libor plus 140 bps.

NYL Investors LLC priced the $415 million Flatiron CLO 2015-1 Ltd./Flatiron CLO 2015-1 LLC deal and placed the class A floating-rate notes at Libor plus 140 bps.

GC Investment Management LLC’s $404.75 Golub Capital Partners CLO 22 (B) Ltd./Golub Capital Partners CLO 22 (B) LLC offering also brought the AAA slice at Libor plus 140 bps.

Guggenheim Partners Investment Management, LLC’s $846.1 million NZCG Funding Ltd./NZCG Funding LLC transaction priced the AAA tranche on the widest side of the range year to date at Libor plus 177 bps.

The number of small CLO managers that plan to tap the market in 2015 likely will shrink in response to risk retention regulations that require managers to retain a 5% stake in a CLO, Fitch Ratings said in a release on Thursday.

Meanwhile the use of backup managers has increased, Fitch said.

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