New issue spreads wide compared to start of 2014; Mariner closes CLO, details new business

By Cristal Cody

Tupelo, Miss., Jan. 8 – CLO primary spreads remain wide compared to a year ago, according to Wells Fargo Securities, LLC.

“For full-year 2014, benchmark AAA spreads widened approximately 10 bps, from 150 bps in January 2014 to 160 bps in December 2014,” Wells Fargo Securities senior analyst Dave Preston and associate analyst Jason McNeilis said in a note.

“AA spreads widened 50 bps on the year, and single-A spreads moved wider approximately 40 bps,” the analysts said. “BBB and BB also moved wider, with the biggest move in BB spreads, which increased from 625 bps to 695 bps.”

AA notes priced on average at Libor plus 250 basis points, while A notes came at the Libor plus 350 bps area and BBB notes were brought in the Libor plus 460 bps area in December.

Mariner Investment Group, LLC announced on Thursday that it closed on its first CLO deal, the $502 million Elm CLO 2014-1 Ltd./Elm CLO 2014-1 LLC transaction brought via BofA Merrill Lynch in December.

Mariner Investment Group placed the notes due Jan. 17, 2023 in a AAA tranche at Libor plus 140 bps, according to a market source.

In November, the New York City-based alternative asset management firm launched a CLO business and hired a 13-person corporate credit team from majority interest partner ORIX USA Corp. to enhance Mariner’s “ability to capture what it believes is an ongoing opportunity in the CLO market,” a news release said.

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