CLO middle-market volume rises; NewStar prices $397.25 million; secondary spreads flat

By Cristal Cody

Tupelo, Miss., Feb. 27 – Two more middle-market CLO deals have priced, bringing total volume year to date to nearly $2 billion, according to market sources on Monday.

NewStar Financial, Inc. sold $397.25 million of notes at par in the firm’s new middle-market offering.

Also, Madison Capital Funding LLC priced the $303 million MCF CLO V LLC middle-market deal via Wells Fargo Securities LLC, a source said. The AAA-tranche priced at Libor plus 190 basis points. Final pricing details were not available by press time.

In new broadly syndicated CLO issuance, GSO/Blackstone Debt Funds Management LLC priced $611.37 million of notes due April 20, 2030 in the Grippen Park CLO Ltd./Grippen Park CLO LLC transaction, according to a market source.

KKR Financial Advisors II, LLC priced $609 million of notes due March 15, 2029 in the KKR CLO 17 Ltd./KKR CLO 17 LLC transaction.

Ares Management LP subsidiary Ares CLO Management LLC priced $409.45 million of notes due 2028 in the Ares XLII CLO Ltd./Ares XLII CLO LLC deal.

Also, Alcentra NY LLC sold $510 million of notes in the Shackleton 2017-X CLO, Ltd. deal.

Final pricing details were not available by press time.

About $7 billion of new broadly syndicated CLOs have priced year to date, according to a BofA Merrill Lynch note.

In the secondary market, $243 million of bonds appeared on CLO BWIC lists the previous week, according to BofA Merrill Lynch.

CLO spreads ended the week unchanged across the capital stack but are tighter on the year.

Year to date, AAAs are trading 10 bps tighter at Libor plus 120 bps, while BBs have come in 100 bps to Libor plus 625 bps and B-rated spreads have tightened 200 bps year to date to Libor plus 875 bps, according to the note.

“U.S. CLO investors remain optimistically positioned in U.S. CLOs despite what most perceive to be fair-to-over valuations according to our latest U.S. CLO investor survey,” BofA Merrill Lynch analysts said. “Although spreads have tightened sizably since November, survey respondents see further room for spreads to grind tighter over the next three months.”

NewStar sells CLO

NewStar Financial sold $397.25 million of notes at par in the middle-market CLO transaction, according to an informed source.

NewStar Commercial Loan Funding CLO 2017-1 LLC priced $207 million of class A-T notes at Libor plus 178 bps at the top of the capital structure.

Natixis Securities Americas LLC arranged the offering.

Boston-based NewStar priced two middle-market CLO deals in 2016.

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