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CLO issuance on track; spreads tighten across capital stack, BBBs in 45 bps year to date
By Cristal Cody
Tupelo, Miss., March 2 – Two new CLO deals helped push total issuance to more than $14 billion year to date, according to market sources and data compiled by Prospect News.
Invesco Senior Secured Management, Inc. sold an upsized $618 million of notes in the Betony CLO Ltd./Betony CLO LLC offering, a source said.
The deal was upsized from $515.5 million.
Morgan Stanley & Co. LLC was the placement agent.
Crestline Denali Capital, LP brought $413.7 million of notes in the Denali Capital CLO XI, Ltd./Denali Capital CLO XI, LLC transaction, according to a market source.
Natixis Securities Americas LLC was the placement agent.
Final pricing terms were not available by press time.
CLO issuance year to date is ahead of the same period a year ago.
Issuance through the first two months of 2014 was $8.9 billion, according to Wells Fargo Securities, LLC.
Spreads firm
In the secondary market, U.S. 2.0 CLO spreads remained firm over the past week due to a “relatively light primary supply and strong demand,” BofA Merrill Lynch analysts said in a market note.
Spreads have tightened across the capital structure.
U.S. CLO AAA notes traded at Libor plus 153 bps, 2 bps tighter and 10 bps better year to date, the note said.
AA notes tightened to Libor plus 220 bps, 10 bps better from a week ago and 35 bps better since the start of the year.
CLO A-rated notes firmed 5 bps to Libor plus 325 bps, 30 bps tighter year to date.
BBB spreads firmed to Libor plus 430 bps, 10 bps better from a week ago and 45 bps stronger since January.
BB notes were quoted at Libor plus 680 bps, 5 bps tighter from the previous week and 25 bps better year to date.
“Even though the new issue calendar in the CLO space could limit the pace of tightening in the near term, U.S. 3.0 mezz remains our favored selection as credit fundamentals are expected to remain in check,” BofA Merrill Lynch analysts said.
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