Spire Partners in European market; Wells Fargo lowers CLO issuance volume forecast

By Cristal Cody

Eureka Springs, Ark., May 20 – Spire Partners, LLP brought a €359.7 million CLO deal on Friday, according to a market source.

The Aurium CLO II Designated Activity Co. offering was priced via Credit Suisse Securities (Europe) Ltd. Final pricing details were not available by press time.

May U.S. and European CLO deal action has been steady following two months of more frequent issuance, still the volume is expected to be thin over the year.

On Friday, Wells Fargo Securities LLC analysts lowered their CLO volume forecast for a second time this year. The analysts said in a market note they revised their issuance forecast to $50 billion from a revised $60 billion estimate in March.

A “barren loan primary market” is the biggest limit on CLO issuance, Wells Fargo analysts said.

In new deal activity, tiering “is still quite pronounced, as AAA coupons range from 155 [basis points] to 185 bps,” the analysts said. “The tiering is evident throughout the capital stack, as May’s CLOs have posted weighted average debt coupons from the 220 bps range to almost 260 bps.”

The primary supply may be contributing to softer BB and B spreads, the analysts said.

CLO BB-rated spreads are 50 bps wider from late April, while B-rated spreads are 100 bps wider than recent tights, according to the report.

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