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Prudential pulls Dryden CLO deal; secondary CLO market shows signs of stabilization
By Cristal Cody
Tupelo, Miss., Feb. 24 – While market conditions are improving enough that some new CLO issuance is expected on the horizon, one deal has been pulled from the near-term calendar.
Standard & Poor’s announced on Tuesday that it withdrew its preliminary ratings from Prudential Investment Management, Inc.’s $507.75 million Dryden 42 Senior Loan Fund/Dryden 42 Senior Loan Fund LLC CLO deal.
“It is our understanding that the deal will no longer be coming to the market in the immediate future,” S&P said in a news release. “As such, we withdrew the preliminary ratings at the issuer’s request.”
The transaction was expected to include $310 million of class A floating-rate notes; $60 million of class B floating-rate notes; $37.5 million of class C deferrable floating-rate notes; $27.5 million of class D deferrable floating-rate notes; $24 million of class E deferrable floating-rate notes and $48.75 million of subordinated notes.
BNP Paribas Securities Corp. was the placement agent for the deal.
Prudential Investment Management, the primary asset management business of Newark, N.J.-based Prudential Financial, was in the U.S. primary market with four CLO deals in 2015.
Number of deals in pipeline
Total year-to-date U.S. CLO issuance, including broadly syndicated and middle-market volume, is $1.17 billion, according to Prospect News data.
“At $1.2 billion, the year-to-date issuance this year is a tenth of the issuance over the same period last year,” Deutsche Bank Securities Inc. analyst Bjarni Torfason said in a note released on Wednesday.
“There are a number of deals being marketed, and with calmer markets we could see some CLOs start pricing again,” he said. “As markets broadly have been rebounding over the last two weeks, the secondary CLO market seems to be stabilizing although we are yet to see spreads start tightening.”
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