CLO primary thin; Prudential prices $512.2 million: Benefit Street refinances $415.3 million

By Cristal Cody

Tupelo, Miss., Sept. 21 – Details emerged on a new CLO deal from Prudential Investment Management, Inc., while September CLO primary action overall remains light.

“Primary is expected to be slow in September, for the third consecutive month, and should be down in 2H15 from 1H15, which saw $61 [billion],” J.P. Morgan Securities LLC analysts said in a note. “With only 2.5 months to go before Thanksgiving, the next couple of months are going to have to pick up for CLO supply to reach our $100-$110 [billion] forecast.”

In refinancing activity, Benefit Street Partners LLC refinanced $415.3 million of notes in a vintage 2012 CLO deal.

CLO issuance this year to date totals about $84.5 billion of volume, including broadly syndicated deals, refinancings and middle-market issuance, according to data compiled by Prospect News.

In the U.S. CLO secondary market, BWIC volumes totaled more than $800 million in the previous week with trading concentrated in AAA paper, BofA Merrill Lynch analysts said in a note.

About €140 million of European CLO bonds concentrated in vintage 1.0 mezzanine bonds appeared on BWIC lists over the past week, the analysts said.

“Trading levels appeared slightly softer than in recent weeks, potentially explained by the reduced liquidity with so many market participants away from their desks,” BofA Merrill Lynch analysts said. “1.0 single A bonds generally traded at spreads in the mid-200s, for 2.5- to 3.5-year paper, while some BB bonds traded at spreads ranging from around 450 to 525 bps.”

Prudential prices

Prudential Investment Management tapped the market with a $512.2 million broadly syndicated CLO offering, a source said.

Dryden 41 Senior Loan Fund/Dryden 41 Senior Loan Fund LLC sold $320.75 million of class A floating-rate notes at Libor plus 150 bps at the top of the capital structure.

Citigroup Global Markets Inc. was the placement agent.

Prudential has been in the primary market with four dollar-denominated CLO deals this year to date.

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

Benefit Street refinances

CLO manager Benefit Street Partners refinanced $415.3 million of notes in the Benefit Street Partners CLO I, Ltd./Benefit Street Partners CLO I LLC transaction, according to a market source.

The CLO priced $286.7 million of class A-1R floating-rate notes (Aaa/AAA) at Libor plus 130 bps in the senior tranche.

Citigroup was the refinancing agent.

The new notes are due Oct. 15, 2025 and have a reinvestment period that ends Oct. 15, 2017.

The transaction is backed primarily by a revolving pool of broadly syndicated senior secured loans.

Benefit Street Partners has priced two new CLOs and refinanced one vintage CLO year to date.

The New York City-based credit investment arm of Providence Equity Partners LLC brought two CLO transactions in 2014.

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