BlueMountain prices $424 million CLO; Regatta sells $411 million; mezzanine spreads rally

By Cristal Cody

Eureka Springs, Ark., April 18 – CLO primary action remains light in the U.S. market with two new deals brought so far in April, according to market sources on Monday.

BlueMountain Capital Management LLC priced $424 million of notes in a new CLO transaction.

Regatta Loan Management LLC tapped the primary market with a $411 million deal.

“The US CLO market has had a quiet start to the new quarter with only two deals pricing in all of April,” J.P. Morgan Securities LLC analysts said in a note. “U.S. weekly issuance is averaging a pace of $0.57 [billion] per week in 2016.”

In the secondary market, BWIC volumes were up by more than 50% to $873 million over the previous week, according to a BofA Merrill Lynch note.

“Activity was heavily concentrated in CLO 2.0 AAAs and BBs which together accounted for over two-thirds of total volumes,” BofA Merrill Lynch analysts said. “Mezzanine CLO tranches have rallied, albeit with a lag, in tandem with the rally in broader risk assets.”

AAA CLO spreads tightened by 5 basis points to Libor plus 155 bps, while BBB, BB and B spreads came in 25 bps over the past week.

BBB-rated spreads were seen at Libor plus 550 bps, BB spreads tightened to Libor plus 925 bps, and single B spreads traded at Libor plus 1,400 bps.

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