Fortress, Onex price new CLOs; Palmer Square markets deal; 3.0 CLOs rally, 2.0 notes stable

By Cristal Cody

Eureka Springs, Ark., April 25 – April CLO volume rose to more than $1.5 billion following the issuance of two more deals, according to market sources on Monday.

Fortress Investment Group LLC tapped the primary market with a $633.6 million transaction.

Onex Credit Partners, LLC priced a $501.6 million deal, OCP 2016-11 Ltd./OCP CLO 2016-11 Corp., on Friday via Citigroup Global Markets Inc., a source said. Final pricing details were not available by press time.

Coming up in the primary market, Palmer Square Capital Management LLC is on the calendar with a $200,475,000 CLO deal.

In the secondary market, new 3.0 CLO notes traded stronger over the previous week, according to J.P. Morgan Securities LLC.

“The rally continues at the top of the capital structure with AAA-BBB 3.0 CLO spreads tightening 3-15 [basis points] in spread this week,” J.P. Morgan analysts said in a note. “Further down the stack in BB/Single-Bs, spreads were unchanged as we see less investor participation in secondary as investors are a bit more tentative given the perceived lack of upside at current levels.”

2.0 CLO notes were mostly unchanged over the past week in the secondary market, with AAAs at Libor plus 155 bps and BBs at Libor plus 925 bps, according to BofA Merrill Lynch.

“While volumes were heavily concentrated in CLO 2.0 junior mezzanine tranches last week, CLO 2.0 senior tranches were active this week accounting for just over half of total BWIC volumes,” the BofA Merrill Lynch analysts said. “BWIC volumes fell 25% [week over week] to just under $660 [million].”

Fortress prices $633.6 million

Fortress Investment Group brought a $633.6 million CLO deal via Goldman Sachs & Co., according to a market source.

FDF II Ltd. priced $306 million of class A floating-rate notes at Libor plus 429 bps at the top of the capital structure.

FDF II CM LLC will manage the transaction.

New York City-based Fortress Investment Group priced three CLOs and one CDO deal, as well as refinanced two vintage 2012 CLOs, l in 2015.

Palmer Square plans $200.4 million

Palmer Square Capital Management plans to price a $200,475,000 CLO offering of notes due June 21, 2024, a source said.

The Palmer Square Loan Funding 2016-2 Ltd./Palmer Square Loan Funding 2016-2 LLC transaction includes $135 million of class A-1 floating-rate notes (/AAA/); $18.4 million of class A-2 floating-rate notes (/AA/); $16.9 million of class B deferrable floating-rate notes (/A/); $7.65 million of class C deferrable floating-rate notes (/BBB/); $7.05 million of class D deferrable floating-rate notes (/BB/) and $15,475,000 of subordinated notes.

J.P. Morgan Securities LLC will arrange the transaction.

Palmer Square Capital Management will manage the CLO.

The CLO is non-callable until June 21, 2017. The deal does not have a reinvestment period.

The offering is backed primarily by broadly syndicated senior secured loans.

Leawood, Kan.-based Palmer Square Capital Management priced three CLOs in 2015.

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