Crestline Denali Capital sells $358.84 million CLO; U.S. spreads flat; euro spreads firm

By Cristal Cody

Eureka Springs, Ark., March 7 – Crestline Denali Capital, LP tapped the CLO primary market for the first time in a year with a $358.84 million Rule 144A-eligible CLO deal.

Also in the primary market, Highbridge Principal Strategies LLC priced $407 million of notes in the Highbridge Loan Management 8-2016 Ltd./Highbridge Loan Management 8-2016 LLC offering, according to a market source. Morgan Stanley & Co. LLC was the placement agent. Final pricing details were not available by press time.

The deals bring total year-to-date CLO issuance to $3.8 billion, according to J.P. Morgan Securities LLC analysts.

“Broader markets finding a floor since mid-Feb may help CLO prices lower down bounce a bit and help open up the new issue CLO market,” the analysts said in a note.

CLO spreads remain at historically wide spread levels, according to a BofA Merrill Lynch report.

U.S. secondary market activity was thin and spreads were flat on the week across the capital stack, BofA Merrill Lynch analysts said.

AAA-rated notes were unchanged at Libor plus 185 basis points, while BB spreads were flat at Libor plus 1,200 bps.

European CLO spreads tightened over the past week by 10 bps to 15 bps for 2.0 A to BB paper but on “very little trading volume,” the analysts said. “2.0 BB spreads appear to have widened, with spread levels generally in the 1100s.”

Crestline Denali prices

Crestline Denali Capital raised $358.84 million in the Denali Capital CLO XII, Ltd./Denali Capital CLO XII LLC offering, according to a market source.

Denali Capital CLO XII sold $192.25 million of class A-1 floating-rate notes at Libor plus 155 bps and $30 million of 3% class A-2 fixed-rate notes in the senior tranches.

BNP Paribas Securities Corp. arranged the deal.

The deal is backed primarily by first-lien senior secured loans.

Proceeds will be used to purchase a portfolio of about $350 million of mostly senior secured leveraged loans.

The deal is Crestline Denali’s first CLO transaction since Feb. 25, 2015 when it priced the $413.68 million Denali Capital CLO XI, Ltd./Denali Capital CLO XI LLC offering.

The asset management firm is based in Oak Brook, Ill.

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