CLO spreads flat; supply positive; OCP prices; Guggenheim preps $512.75 million CLO

By Cristal Cody

Tupelo, Miss., Nov. 3 – Benchmark CLO spreads ended October flat following the release of finalized risk retention rules for U.S. CLO managers, according to a J.P. Morgan Securities LLC market note.

CLO AA-rated notes were quoted unchanged at Libor plus 150 basis points, while BBB spreads were flat at Libor plus 320 bps.

“CLO market technicals may improve but on the margin, as net supply is likely to remain positive,” JPMorgan analysts said in the note. “We expect U.S. CLO gross supply to decline but remain elevated on a historical basis. We reiterate our $70-80 [billion] gross forecast for FY 2015, which though down 30-40% y-o-y would still mark the 5th highest all-time total.”

In new issuance, Onex Credit Partners, LLC sold $514 million of notes in a private placement offering, according to a statement on Monday from parent company Onex Corp.

The OCP CLO 2014-7 Ltd./OCP CLO 2014-7 Corp. transaction priced via Citigroup Global Markets Inc., a market source said.

Onex said it purchased a majority of the equity in the transaction.

Final pricing details were not available by press time.

Separately, Guggenheim Partners Investment Management, LLC is in the pipeline with the $512.75 million Ziggurat CLO Ltd./Ziggurat CLO LLC deal, a market source said.

BofA Merrill Lynch is the placement agent.

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