Acis, NXT price new CLOs; PGIM taps Europe; Octagon refinances; CLO spreads unchanged

By Cristal Cody

Tupelo, Miss., March 27 – New CLO issuance is picking up, while refinancing action continues at a heavy pace, according to market sources on Monday.

Acis Capital Management, LP priced a $405.5 million CLO, which included a senior equity tranche that priced at Libor plus 775 basis points.

NXT Capital LLC subsidiary NXT Capital Investment Advisers LLC placed $406.35 million of notes in a new middle-market transaction.

In European CLO primary action, PGIM Ltd. brought a €416.38 million new CLO to market.

Looking at new refianncings, Octagon Credit Investors, LLC refinanced $453.75 million of notes from a vintage 2014 CLO.

“One question we have been receiving is how much longer the refi wave can last,” J.P. Morgan Securities LLC analysts said in a note.

In the first quarter of 2016, the monthly average of refi/reset volume was 24, and year to date, the monthly run rate since February has been about 40 deals, according to JPMorgan.

“Assuming the market remains firm, this 40 monthly run rate in 2017 persists, and a CLO can only be refinanced once, that would bring us to about August or September until the entire post-crisis U.S. CLO market is refinanced,” the analysts said. “So far, 26% of the Q2-Q4 2013 CLOs and 42% of 2014 vintage CLOs have been refinanced/repriced/called.”

In the secondary market, CLO spreads ended Friday flat on the week, according to a BofA Merrill Lynch note.

“Despite the pick-up in broad market volatility this past week, U.S. CLO secondary spreads held in firm amidst what was once again relatively light activity,” BofA Merrill Lynch analysts said in the note. “BWIC volumes totaled about $450 [million] and were rather evenly distributed across the capital stack. Bidding remained strong given the overall demand for floating-rate assets.”

CLO 2.0/3.0 AAA spreads were unchanged at Libor plus 115 bps.

Euro CLO AAA spreads were flat on the week at Euribor plus 100 bps.

Acis raises $405.5 million

Acis Capital Management priced $405.5 million of notes due May 20, 2029 in a CLO offering, according to a market source.

ACIS CLO 2017-7 Ltd. sold $85.75 million of class A-1 senior secured floating-rate notes at Libor plus 135 bps and $175 million of class A-2 senior secured floating-rate notes at Libor plus 135 bps in the senior tranches.

Guggenheim Securities LLC arranged the transaction.

The deal is backed primarily by a revolving pool of broadly syndicated first-lien senior secured corporate loans.

Acis Capital Management is a Dallas-based asset management firm.

NXT prices $406.35 million

NXT Capital Investment Advisers priced $406.35 million of notes due April 20, 2029 in a new middle-market CLO offering, a source reported.

NXT Capital CLO 2017-1 LLC sold $226.7 million of class A floating-rate notes at par to yield Libor plus 170 bps at the top of the capital structure.

Wells Fargo Securities LLC arranged the deal.

The deal is backed primarily by a senior secured loans, cash and eligible investments.

Proceeds will be used to purchase a $400 million portfolio of middle-market loans.

NXT Capital is a Chicago-based middle-market lending and financial services firm.

PGIM brings euro CLO

PGIM sold €416.38 million of notes due July 15, 2030 in a new European CLO offering, according to a market source.

Dryden 51 Euro CLO 2017 BV priced €205.5 million of senior secured floating-rate notes at Euribor plus 85 bps in the class A-1 tranche.

Credit Suisse Securities (Europe) Ltd. was the placement agent.

The deal is collateralized primarily by senior secured loans and senior secured bonds.

PGIM has priced one new European CLO and refinanced one vintage CLO year to date.

The CLO manager priced two euro-denominated CLOs and refinanced one deal in 2016.

London-based PGIM is the asset management arm of Newark, N.J.-based Prudential Financial Inc.

Octagon refinances

Octagon Credit Investors refinanced $453.75 million of notes due April 15, 2026 at par in the vintage 2014 Octagon Investment Partners XIX, Ltd./Octagon Investment Partners XIX, LLC transaction, according to a market source and a notice of executed supplemental indenture on Friday.

The CLO sold $346.5 million of class A-R senior secured floating-rate notes at Libor plus 110 bps in the AAA-rated slice.

Wells Fargo Securities LLC arranged the offering.

Proceeds were used to redeem the original class A, B-1, B-2 and C notes.

Octagon Credit Investors has refinanced two vintage CLOs year to date.

Octagon priced three new CLOs and refinanced one CLO in 2016.

The New York-based credit investment firm is a subsidiary of Cathay Financial Holding Co. Ltd.

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