PGIM brings €412.9 million CLO; volume remains light; seller’s market in secondary trading

By Cristal Cody

Eureka Springs, Ark., May 3 – Details emerged on the €412.9 million European CLO deal that Prudential Financial, Inc. affiliate PGIM Ltd. priced.

The CLO manager sold €412.9 million of notes in the transaction.

Euro-denominated CLO issuance totals €4.02 billion from 10 deals year to date, according to Prospect News data.

U.S. dollar CLO volume is nearly $14 billion from 34 deals to date after stronger primary action in March and April, data shows.

“Following two months of historically slow primary issuance, volume picked up in each of the past two months, with $4.9 billion issued in March and $5.3 billion issued in April,” Wells Fargo Securities LLC analysts said in a note.

“Despite the pickup from the first two months of the year, issuance is still well below the year-to-date level seen in recent years, at 37% and 32% of 2014 and 2015 year-to-date issuance, respectively,” the analysts said. “For comparison, primary issuance in April 2015 was $10.4 billion.”

Technical support for CLOs down the capital stack remains strong, according to the note.

“However, we suspect further tightening could be limited, and that the current rally appears fragile,” the Wells Fargo analysts said. “Spreads have tightened down the stack for 2.0 deals; secondary has tightened slightly more than primary over the past month, and the basis between primary and secondary spreads has tightened as a result.”

The secondary market currently is a seller’s market, “especially in BB’s,” the analysts said.

PGIM raises €412.9 million

PGIM priced €412.9 million of notes due July 15, 2030 in the Dryden 44 Euro CLO 2015 BV transaction, according to a market source.

The CLO sold €232.4 million of class A-1 senior secured floating-rate notes (Aaa/AAA) at Euribor plus 145 basis points and €12.3 million of 1.66% class A-2 senior secured fixed-rate notes (Aaa/AAA) in the senior tranches.

J.P. Morgan Securities plc arranged the deal.

PGIM will manage the CLO.

The CLO has a two-year non-call period and a four-year reinvestment period.

The deal is backed mainly by euro-denominated senior secured loans and bonds.

The London-based firm is an affiliate of Prudential Financial, Inc.

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