Guggenheim reprices $776.4 million; rule repeal forecast to spur CLO refinancing volume

By Cristal Cody

Tupelo, Miss., Feb. 9 – Guggenheim Partners Investment Management LLC priced $776.4 million of notes in a refinancing and reset of a vintage 2015 CLO as refinancing activity remains strong early in the year.

Nearly $15 billion of CLOs already have been refinanced year to date, according to BofA Merrill Lynch data.

CLO refinancing volume may get even heavier after the U.S. Court of Appeals for the District of Columbia ruled on Friday that CLO managers are not subject to risk retention rules, Wells Fargo Securities, LLC analysts said in a note.

The ruling that reversed a lower court ruling against the Loan Syndications and Trading Association is expected to increase supply of refinancings and resets since “managers no longer have to decide between allocating risk retention capital to existing deals or new issue,” the analysts said.

“All else equal, we think refi supply specifically should increase, as managers may have been less willing to allocate retention capital to shorter-lived CLOs,” the Wells Fargo analysts said. “The ruling may not allow immediate relief to all CLOs, as we believe some risk retention solutions may allow for an unwind if risk retention is no longer required, but others may have to stay in place.”

Risk retention rules went into effect on Dec. 24, 2016 and required issuers to retain 5% of the CLO deal.

Guggenheim reprices NZCG

Guggenheim Partners Investment Management sold $776.4 million of notes due February 2031 in the refinancing, according to a notice of proposed supplemental indenture and optional redemption on Thursday.

NZCG Funding Ltd./NZCG Funding LLC priced $540 million of class A-1-R senior secured floating-rate notes at Libor plus 112 basis points in the senior tranche.

Citigroup Global Markets Inc. arranged the offering.

The maturity on the notes was extended from the original Feb. 25, 2027 maturity.

The original $846.1 million CLO was issued on Feb. 25, 2015. The CLO had priced $514 million of class A-1 floating-rate notes at Libor plus 177 bps.

Guggenheim Partners Investment Management is an investment management firm based in New York and Chicago.

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