CLOs set for record year; Sankaty, Ares bring deals; NewStar middle market CLO closes

By Cristal Cody

Tupelo, Miss., July 1 – The U.S. CLO market is “on pace for [a] record year of issuance” following a surge of deals in June, Moody’s Investors Service said in a report on Tuesday.

About $70 billion of CLOs have priced globally year to date, while more than $14 billion of CLOs priced in June, according to data compiled by Prospect News.

CLO AAA-rated notes had “lingered” around the Libor plus 150 bps area over the first five months of the year, Moody’s said in the report.

“The spreads were sticky until June, when they started to tighten,” Moody’s said.

Sankaty Advisors LLC priced a $415.25 million CLO deal and placed the AAA-rated tranche at Libor plus 146 basis points, according to a market source.

In other new issuance, additional details emerged for Ares Management Ltd.’s European CLO offering.

The firm priced the AAA-rated tranche of notes at Euribor plus 135 bps, a source said.

Meanwhile, NewStar Financial, Inc. announced on Tuesday that it closed on the previously reported $409,417,000 middle market CLO transaction that priced in a private placement offering via Rule 144A and Regulation S on June 5.

The NewStar Arlington Senior Loan Program LLC transaction arranged by Wells Fargo Securities, LLC closed on Thursday.

NewStar said the deal was structured with several innovative features including a class of step-up notes to “meet specific investor demand.”

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