Neurberger Berman preps deal; Carlyle to reset CLO; resets ‘more difficult’ after Dec. 24

By Cristal Cody

Eureka Springs, Ark., Aug. 17 – Two more CLO managers joined the deal pipeline.

Neuberger Berman Investment Advisers LLC is offering a $409 million CLO transaction.

Carlyle Investment Management LLC is set to bring a reset refinancing transaction of its $615.9 million Carlyle Global Market Strategies CLO 2012-3, Ltd./Carlyle Global Market Strategies CLO 2012-3 LLC deal.

Reset transactions will be “considerably more difficult after Dec. 24 this year since they would have to comply with risk retention,” Deutsche Bank Securities Inc. analyst Bjarni Torfason said in a note on Wednesday.

A reset of a vintage CLO includes the refinancing of all its liabilities and also extends other parts, such as the maturity, reinvestment period, non-call period and weighted average life test, he said.

“In past years the length of the extensions have varied but the purest version of the reset can be thought to be when the reinvestment period and weighted average are extended by four years and a new two-year non-call period added,” Torfason said. “This way the CLO can be restructured to have most of the attributes of a new issue CLO while keeping the assets in place and not having to go through liquidation of the old CLO and then ramping up a new one. Last year there were four CLO resets by our count and earlier this year we saw the only reset this year.”

Vintage 2012 and 2013 CLOs are the most likely candidates for reset refinancings, according to the note.

Neuberger Berman offers CLO

Neuberger Berman Investment Advisers intends to price $409 million of notes due Oct. 17, 2027 in the Neuberger Berman CLO XXII, Ltd./Neuberger Berman CLO XXII, LLC deal, according to a market source.

The transaction includes $248 million of class A senior secured floating-rate notes (Aaa/AAA); $52 million of class B senior secured floating-rate notes (Aa2); $26 million of class C mezzanine secured deferrable floating-rate notes (A2); $25 million of class D mezzanine secured deferrable floating-rate notes (Baa3); $17 million of class E junior secured deferrable floating-rate notes (Ba3) and $41 million of subordinated notes.

BofA Merrill Lynch is the placement agent.

The transaction is expected to close on Sept. 29.

Neuberger has priced one new CLO and refinanced tranches from two vintage CLOs year to date.

The Chicago-based firm, part of Neuberger Berman Group, LLC, brought two CLO transactions to market in 2015.

Carlyle readies deal

Carlyle Investment Management intends to price a reset refinancing transaction of its $615.9 million Carlyle Global Market Strategies CLO 2012-3, Ltd./Carlyle Global Market Strategies CLO 2012-3 LLC deal, according to market sources.

The CLO originally sold $391.5 million of class A-1 senior secured floating-rate notes (Aaa/AAA) at Libor plus 141 basis points; $52.5 million of class A-2 senior secured floating-rate notes (AA+) at Libor plus 225 bps; $49.9 million of class B senior secured deferrable floating-rate notes (A+) at Libor plus 350 bps; $29.5 million of class C senior secured deferrable floating-rate notes (BBB+) at Libor plus 450 bps; $33 million of class D senior secured deferrable floating-rate notes (BB) at Libor plus 550 bps and $59.5 million of subordinated notes.

The notes are due Oct. 4, 2024.

Citigroup Global Markets Inc. is the refinancing agent.

Carlyle Investment Management has refinanced tranches from two vintage CLOs and priced two new U.S. CLO deals year to date.

The asset management firm, an affiliate of the Washington, D.C.-based Carlyle Group, priced five U.S. broadly syndicated CLO transactions and one middle-market CLO offering in 2015.

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