AAAs may tighten under risk rules; Napier Park sells $514.5 million CLO; CVC prices

By Cristal Cody

Tupelo, Miss., Oct. 22 – Although CLO issuance is projected to potentially fall after 2016 when risk retention rules take effect, tighter AAA spreads could be the upside, Barclays said on Wednesday.

The Federal Deposit Insurance Corp. on Tuesday released final risk retention rules that require CLO managers to retain 5% capital of new deals starting in October 2016.

CLOs issued before Oct. 21, 2016 will be grandfathered under the securitization risk retention requirement required under the Dodd-Frank Act.

“Obvious implications include a possible rise in manager concentration and slower issuance, but benefits may eventually also include tighter U.S. AAA spreads and an improved CLO equity arb,” Barclays analysts said in a note on Wednesday.

In new CLO primary activity, Napier Park Global Capital (US) LP priced its third CLO deal of the year.

The New York City-based global alternative asset manager sold $514.5 million of notes due Oct. 25, 2026 in the Regatta V Funding Ltd./Regatta V Funding LLC offering, according to a market source.

Citigroup Global Markets Inc. was the placement agent.

In other primary activity, CVC Credit Partners, LLC brought its third CLO deal of the year.

The credit management arm of London-based private equity firm CVC Capital Partners Ltd. sold $512.65 million of notes due Oct. 19, 2026 in the Apidos CLO XIX/Apidos CLO XIX LLC transaction via Wells Fargo Securities LLC, according to a market source.

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