Oaktree, Highbridge price CLOs; volume to date hits $4.25 billion; spreads tighten

By Cristal Cody

Eureka Springs, Ark., March 14 – Details emerged on new issuance brought by Oaktree Capital Management LP and Highbridge Principal Strategies LLC in the U.S. CLO market.

Oaktree Capital Management priced $470 million of notes in the Oaktree EIF I Series A Ltd./Oaktree EIF I Series A LLC transaction.

Highbridge Principal Strategies tapped the primary market with a $406.75 million CLO deal.

The deals bring year-to-date issuance to $4.25 billion, according to market sources.

In the secondary market, BWIC volume rose to $406 million over the previous week, according to a BofA Merrill Lynch note.

“Activity was heavily concentrated in the mezzanine part of the capital structure,” BofA Merrill Lynch analysts said in the note. “CLO 2.0/3.0 BBs were particularly active as hedge-fund buying activity picked up following the improvement in loans trends in recent weeks and the ECB’s decision to provide further easing on Thursday.”

CLO 2.0 spreads tightened across the capital stack, the analysts said. AAA notes firmed 5 basis points over the previous week to Libor plus 185 bps, while BBB notes tightened 25 bps to Libor plus 375 bps and BB-rated notes came in 75 bps to Libor plus 1,125 bps.

Oaktree prices $470 million

Oaktree Capital Management sold $470 million of notes due Jan. 20, 2027 in the Oaktree EIF I Series A offering, according to a market source.

The CLO priced $289.8 million of class A floating-rate notes (Aaa/AAA) at Libor plus 158 bps in the senior tranche.

Wells Fargo Securities LLC was the placement agent.

Oaktree Capital Management will manage the CLO.

The CLO has a non-call period that ends on March 20, 2018 and a reinvestment period that ends on Oct. 20, 2018.

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

Oaktree Capital Management was in the primary market in 2015 with three CLO deals.

The Los Angeles-based asset management firm is a subsidiary of Oaktree Capital Group, LLC.

Highbridge raises $406.75 million

Highbridge Principal Strategies priced $406.75 million of notes due April 20, 2027 in the Highbridge Loan Management 8-2016 Ltd./Highbridge Loan Management 8-2016 LLC deal, according to a market source.

The CLO sold $3 million of class X senior secured floating-rate notes (Aaa/AAA) at Libor plus 100 bps, $248 million of 1.55% class A senior secured fixed-rate notes (Aaa/AAA) and $56 million of class B senior secured floating-rate notes (AA) at Libor plus 240 bps at the top of the capital structure.

Morgan Stanley & Co. LLC was the placement agent.

Highbridge Principal Strategies will manage the CLO.

The CLO is non-callable until April 20, 2018 and the reinvestment period ends Oct. 20, 2020.

The deal is backed by broadly syndicated senior secured loans.

Highbridge closed on three CLO deals in 2015.

The subsidiary of Highbridge Capital Management, LLC is based in New York City.

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