CLO market quiet ahead of Fed decision; additional primary action expected before year ends

By Cristal Cody

Tupelo, Miss., Dec. 16 – CLO deal activity quieted ahead of the Federal Reserve's first rate hike in nine years on Wednesday, but the market is expected to weather any concerns.

Three-month Libor has climbed 17 basis points since the start of November, rising 1 bp to 52 bps on Wednesday.

J.P. Morgan Securities Inc. analysts said in a note that U.S. “CLO debt investors should begin to benefit from higher all-in yields when the majority of coupons next reset in Q1.”

CLO primary action expected before the month ends includes a $435.2 million deal from Oaktree Capital Management LP.

The CLO manager is marketing the Oaktree EIF I Series A1 Ltd./Oaktree EIF I Series A1 LLC transaction via Mitsubishi UFJ Securities (USA) Inc.

GSO/Blackstone Debt Funds Management LLC also is in the deal pipeline with the $506.65 million Webster Park CLO Ltd./Webster Park CLO LLC offering. Citigroup Global Markets Inc. is the placement agent.

More than $105 billion of U.S. CLOs have priced year to date, according to Prospect News data.

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