Intermediate Capital sells €413.99 million CLO; spreads mixed, 3.0 B tranches ease

By Cristal Cody

Tupelo, Miss., Jan. 31 – Intermediate Capital Managers Ltd. tapped the European primary market to price a €413.99 million CLO deal, while Apex Credit Partners LLC placed the dollar-denominated JFIN CLO 2017 Ltd. transaction, according to sources on Tuesday.

Intermediate Capital Managers priced 11 tranches of fixed- and floating-rate and subordinated notes.

Final pricing details for Apex Credit Partners’ offering sold via Jefferies LLC was not available by press time.

Supply in the new year has mostly centered on refinancing vintage CLOs, sources report.

“New issue CLO formation continues to be muted by challenging equity economics,” J.P. Morgan Securities LLC analysts said in a note. “Our metrics suggest that new issue equity economics are at the weakest levels they’ve been since 2014. If loan asset spread compression is to continue, we believe new issue liabilities need to tighten for CLO formation to continue.”

Spreads were mixed in the U.S. 3.0 and 2.0 CLO secondary markets over the previous week.

In 3.0 CLO deals priced in 2016, AAAs were 5 basis points tighter on the week at Libor plus 130 bps, according to JPMorgan. CLO 3.0 B-rated spreads ended the past week 20 bps wider at Libor plus 825 bps.

CLO 2.0 AAAs were flat on the week at Libor plus 125 bps, according to a BofA Merrill Lynch note. B tranches in 2.0 CLOs tightened 50 bps from the previous week to Libor plus 875 bps.

“Unlike the primary market, the secondary U.S. CLO market has remained busy since the beginning of the year,” BofA Merrill Lynch analysts said in the note. “BWIC volumes totaled $1.2 [billion] this week with bonds up for bid across the capital stack.”

Intermediate Capital prices

Intermediate Capital Managers priced €413.99 million of notes due April 30, 2030 in the St. Paul’s CLO VII DAC offering on Monday, according to a market source.

The CLO sold €229.4 million of class A-1 senior secured floating-rate notes at Euribor plus 95 bps and €10.6 million of 1.17% class A-2 senior secured fixed-rate notes at the top of the capital structure.

Deutsche Bank AG, London Branch arranged the deal.

Intermediate Capital Managers is a London-based investment management firm.

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