Pickup in second quarter reissues eyed; NXT to refinance 2015, 2017 middle-market CLOs

By Cristal Cody

Tupelo, Miss., April 2 – CLO refinancing volume is expected to pick up in the second quarter.

NXT Capital LLC subsidiary NXT Capital Investment Advisers LLC plans to refinance notes from two middle-market CLOs.

The CLO manager intends to price $122.65 million of notes in a refinancing of a 2017 deal and $99.5 million of notes in a second refinancing of a 2015 middle-market CLO.

In the first quarter, more than $9 billion of vintage CLOs were refinanced, reset or reissued, according to a BofA Merrill Lynch research report.

CLO refinancings are likely to increase in the second quarter after a month of mostly steady spreads, according to a BofA Merrill Lynch report.

NXT offers $122.65 million

NXT Capital Investment Advisers plans to refinance $122.65 million of notes due April 20, 2029 from the 2017 CLO, according to a notice of proposed first supplemental indenture on Monday.

NXT Capital CLO 2017-1 LLC plans to price $39.7 million of class B-R senior secured floating-rate notes (AA expected), $31.75 million of class C-R secured deferrable floating-rate notes (A expected), $24.8 million of class D-R secured deferrable floating-rate notes (BBB- expected) and $26.4 million of class E-R secured deferrable floating-rate notes (BB expected/.

Wells Fargo Securities LLC is the refinancing placement agent.

NXT Capital 2017-1 originally issued the notes on April 13, 2017.

The CLO sold $39.7 million of the class B floating-rate notes at par to yield Libor plus 235 basis points; $31.75 million of class C deferrable floating-rate notes at par to yield Libor plus 310 bps; $24.8 million of class D deferrable floating-rate notes at 97.557 and a coupon of Libor plus 410 bps and $26.4 million of class E deferrable floating-rate notes at 95.097 and a coupon of Libor plus 735 bps.

Proceeds will be used to redeem the outstanding notes on April 22.

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

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

NXT plans second refi

NXT Capital Investment Advisers also intends to price $99.5 million of notes due April 21, 2027 in a second refinancing of a 2015 middle-market CLO, according to a notice of proposed second supplemental indenture on Monday.

NXT Capital CLO 2015-1 LLC plans to price $39 million of class C-R2 secured deferrable floating-rate notes, $29.5 million of class D-R2 secured deferrable floating-rate notes and $31 million tranche of class E-R secured deferrable floating-rate notes.

Wells Fargo Securities LLC is the refinancing placement agent.

In the first refinancing of $321 million of notes on Jan. 22, 2018, the CLO priced $219.5 million of the class A-R senior secured floating-rate notes at Libor plus 115 bps.

NXT Capital originally issued the notes on May 13, 2015. In that offering, the CLO sold $39 million of the class C notes at Libor plus 365 bps, $29.5 million of class D notes at Libor plus 415 bps and $31 million of class E notes at Libor plus 630 bps.

Proceeds from the second refinancing will be used to redeem the class C-R, D-R and E notes on April 22.

The CLO is backed primarily by senior secured small and medium enterprise loans.

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

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