Octagon refinances $568 million CLO; investor interest increases in middle-market CLOs

By Cristal Cody

Tupelo, Miss., Sept. 11 – New CLO pricing action in September includes a $568 refinancing of vintage 2015 notes.

Octagon Credit Investors, LLC sold $568 million of notes in three tranches in a refinancing of two tranches from the vintage CLO.

The CLO manager has refinanced notes from seven vintage CLOs to date in 2017.

Year to date, more than $117 billion of CLOs have been refinanced, according to market sources.

In other market activity, lower CLO investment-grade, mezzanine and equity tranches are attracting new overseas investors, Wells Fargo Securities, LLC analysts said in a note on Monday after returning from a trip to meet with clients in Asia and Australia.

Middle-market CLOs also are attracting a large increase in interest, the analysts said.

“Many large institutional investors who traditionally buy AAA broadly syndicated loan CLOs have begun to invest in MM CLOs, or are exploring MM CLO investments,” the Wells Fargo analysts said.

In its deal, Octagon Credit Investors priced $568 million of notes due May 21, 2027 from the vintage 2015 Octagon Investment Partners 24, Ltd./Octagon Investment Partners 24, LLC transaction, according to a market source and a notice of proposed supplemental indenture No. 1, revised proposed supplemental indenture No. 2 and additional issuance on Friday.

The CLO sold $484,375,000 of class A-1-R senior secured floating-rate notes at Libor plus 90 basis points in the senior tranche.

Citigroup Global Markets Inc. was the refinancing placement agent.

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