Oak Hill taps Europe; Prudential refinances $473.5 million CLO; refinancings ‘attractive’

By Cristal Cody

Tupelo, Miss., May 4 – New CLO issuance in Europe includes a €385.1 million deal from Oak Hill Advisors (Europe), LLP, while refinancing activity continues in the U.S. market, according to sources.

Prudential Investment Management, Inc. refinanced $473.5 million of notes in a vintage 2012 CLO deal.

The senior tranches priced at tighter spreads than where the notes first priced, while the class E and class F notes were refinanced at wider spreads than the original issuance.

“We believe that refinanced CLO debt, single-As in particular, offer relative value to new issue given the limited spread basis, shorter WAL, and Volcker-compliance typifying most refinancings,” J.P. Morgan Securities LLC analysts said in a note.

Prudential’s “single-A refinanced tranche priced at par with L+270 bp coupon versus a recently issued tranche from the same manager, also priced at par at L+290 [bps],” the analysts said. “Such trades should be attractive to a number of investors, even banks going down the credit curve.”

Oak Hill prices CLO

Oak Hill Advisors (Europe) priced €385.1 million of notes due June 15, 2028 in a euro-denominated CLO offering, according to a market source.

Oak Hill European Credit Partners III Ltd. sold €201.1 million of class A-1 senior secured floating-rate notes at Euribor plus 130 basis points in the senior slice.

Goldman Sachs & Co. arranged the transaction.

The deal is backed primarily by euro-denominated senior secured obligations.

Proceeds from the transaction will be used to purchase a €400 million portfolio of European leveraged loans and bonds.

Oak Hill Advisors (Europe) is a credit manager based in London.

Prudential refinances

Prudential Investment Management sold $473.5 million of notes due Nov. 15, 2023 in a refinancing of a vintage 2012 CLO deal, according to a market source.

Dryden XXIV Senior Loan Fund/Dryden XXIV Senior Loan Fund LLC priced $316.5 million of class A-R floating-rate notes at Libor plus 129 bps, tighter than where the notes originally came at Libor plus 143 bps.

The CLO sold $58.5 million of class B-R floating-rate notes at Libor plus 187 bps, compared to the original pricing of Libor plus 225 bps.

The CLO placed the $43.5 million tranche of class C-R floating-rate notes at Libor plus 270 bps, tighter than where the notes first priced at Libor plus 310 bps.

The $23.5 million tranche of class D-R floating-rate notes were refinanced at Libor plus 370 bps. The notes originally priced at Libor plus 475 bps.

The CLO sold $21.5 million of class E-R floating-rate notes at Libor plus 595 bps, compared to where the notes originally priced at Libor plus 590 bps.

Finally, the $10 million slice of class F-R floating-rate notes were refinanced at Libor plus 790 bps. The notes originally were sold at Libor plus 650 bps.

Morgan Stanley & Co. LLC was the refinancing agent.

The deal is collateralized primarily by broadly syndicated first-lien senior secured corporate loans.

Proceeds from the refinancing will be used to fully redeem the original class A, B, C, D, E and F notes on the May 15 refinancing date.

Prudential has priced two CLO transactions year to date, including the $515.2 Dryden 38 Senior Loan Fund/Dryden 38 Senior Loan Fund LLC deal on March 25.

The primary asset management business of Newark, N.J.-based Prudential Financial, Inc., brought three U.S. CLO offerings in 2014.

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