Oak Hill, BlackRock price; Cerberus brings middle-market CLO; BBBs, Bs widen in secondary

By Cristal Cody

Tupelo, Miss., Oct. 26 – CLO managers Oak Hill Advisors LP, BlackRock Financial Management, Inc. and Cerberus Capital Management, LP tapped the broadly syndicated and middle market spaces.

Oak Hill Advisors priced $407.71 million of notes due Oct. 20, 2028 in its third new CLO offering this year.

BlackRock Financial Management printed a $620.3 million CLO deal, its third new CLO transaction year to date.

Cerberus Capital Management brought its first CLO transaction of the year and sold $413.3 million of notes in the middle-market deal.

The new transactions bring the monthly total up to $4.9 billion from 10 CLO deals, according to J.P. Morgan Securities LLC.

“The new issue US CLO total, currently at $84.8 [billion] YTD, is inching toward the lower bound of our FY forecast of $100 [billion],” JPMorgan analysts said in a note. “In secondary, liabilities across the capital structure continue to leak wider on selling pressures.”

JPMorgan said CLO AAA, AA, and single-A spreads in its index widened 4 to 5 basis points over the past week.

In the secondary market, U.S. BWIC items totaling $800 million appeared over the past week, with about $30 million in AAA tranches, $150 million in BBB to B tranches and about $140 million of equity notes up for bid, according to BofA Merrill Lynch.

“Continuing the theme from recent weeks, senior tranches held up well with overall spread levels unchanged,” BofA Merrill Lynch analysts said in a note. “Mezzanine and equity trading was choppier with over half of the total volume not trading. BBB to B spreads widened by 25-50 [bps] to 500, 825 and 1,050 [bps] respectively.”

In the European CLO secondary market, about €300 million of mostly CLO 1.0 and 2.0 bonds appeared on BWIC lists, according to the BofA Merrill Lynch note.

“Just over €200 [million] actually traded, which we believe is a higher proportion than in recent weeks,” the analysts said.

“Spreads generally appeared to widen compared to recent weeks, with longer duration 1.0 AAA bonds trading at spreads over around 140-145 bps,” the analysts said. “2.0 AAA bonds generally traded at spreads in the high 140s. Trading ranges remain wide for bonds lower in the capital structure, though four year duration 1.0 BB bonds were trading at spreads approximately ranging from the low 600s to the high 600s.”

Oak Hill brings $407.71 million CLO

In the OHA Credit Partners XI, Ltd./OHA Credit Partners XI LLC transaction, CLO manager Oak Hill Advisors priced $407.71 million of notes due Oct. 20, 2028, according to a market source.

The CLO sold $254 million of class A floating-rate notes (//AAA) at Libor plus 150 bps in the senior tranche.

Wells Fargo Securities LLC arranged the deal.

The CLO has a three-year non-call period and a five-year reinvestment period.

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

Proceeds from the CLO transaction will be used to purchase a portfolio of about $400 million of mainly senior secured leveraged loans.

Oak Hill Advisors has priced two new U.S. CLOs and refinanced one vintage deal year to date.

The New York City-based investment firm brought three CLO deals to market in 2014.

BlackRock prints $620.3 million

BlackRock Financial Management sold $620.3 million of notes due Oct. 25, 2027 in the Magnetite XV, Ltd./Magnetite XV LLC transaction, according to a market source.

A the top of the capital structure, the CLO priced $389 million of class A senior secured floating-rate notes (Aaa//AAA Expected) at Libor plus 148 bps.

GreensLedge Capital Markets LLC was the underwriter.

BlackRock Financial Management will manage the CLO.

The CLO is backed primarily by broadly syndicated first lien senior secured corporate loans.

BlackRock Financial Management has priced three new CLOs and refinanced one vintage 2012 CLO year to date.

The New York City-based investment management firm priced three CLO deals in 2014.

Cerberus places middle-market CLO

In the middle-market CLO space, Cerberus Capital Management sold $413.3 million of notes, a source said.

Cerberus ICG Levered CLO 2015-1 LLC priced $75.9 million of class A-T floating-rate notes (Aaa Expected/) at Libor plus 205 bps at the top of the capital stack.

Natixis Securities America LLC was the placement agent.

Cerberus will manage the CLO.

The New York-based investment firm priced two CLO deals in 2014.

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