Redding Ridge prices $306.9 million; CIFC, CSAM issue euro CLOs; spreads improve

By Cristal Cody

Tupelo, Miss., April 22 – In new primary market action, Redding Ridge Asset Management, LLC priced $306.9 million of notes in a broadly syndicated CLO offering structured differently due to the impact from the coronavirus.

The deal was “structured differently than those deals put together before the Covid-19 recession,” S&P Global Ratings said in an analysis of the offering.

Redding Ridge’s CLO, which is the manager’s third new offering priced so far in 2020, featured risk mitigants including a short one-year reinvestment period, no classes rated below BBB and a deferrable AA class of notes.

The issue had lower leverage due to market prices for underlying assets, lower subordination, higher weighted average cost of debt and lower portfolio weighted average spread, S&P said.

Meanwhile, two managers closed on new euro-denominated CLOs.

CIFC Asset Management LLC priced €419.8 million of notes in its offering.

Credit Suisse Asset Management Ltd. tapped the primary market with a new €402.25 million broadly syndicated CLO.

Fitch Ratings said CIFC’s CLO warehouse portfolio has total exposures to coronavirus-affected sectors including automobiles, transportation and distribution, gaming, leisure and entertainment of €47.8 million.

Credit Suisse Asset Management’s CLO warehouse portfolio has a total portfolio exposure to sectors impacted by the coronavirus including in retail, lodging and restaurants, energy oil and gas of €66.1 million.

Overall, the primary market remains quiet, while “visibility is poor, particularly in mezzanine,” J.P. Morgan Securities LLC analysts said in a research note. “CLO mezzanine continues to lag credit. Where loans and HY have retraced 50-60%, secondary CLO BBB to B have retraced 25-10%. We expect range-bound mezz spreads as pricing may incorporate re-rating in part.”

CLO AAAs have recovered 60% of spread widening in April, the analysts note.

As of Friday, CLO AAA tranches were tracking 175 basis points tighter from March wides at Libor plus 225 bps, while BBB tranches were quoted 125 bps better at Libor plus 750 bps.

CLO BB-rated tranches are treading in the Libor plus 1,500 bps range, about 175 bps tighter than the wides seen in March, while B tranches have recovered 150 bps but remain gapped out at Libor plus 2,350 bps, according to the JPMorgan report.

In the secondary market, $309.03 million of investment-grade CBO/CDO/CLO notes and $90.21 million of non-high-grade paper traded on Tuesday, compared to $206.14 million of high-grade volume and $139.83 million of lower-rated volume on Monday, according to Trace data.

Average prices on investment-grade securities improved to 90.20 from 88.20 on Monday.

Lower-rated CBO/CDO/CLO paper traded at an average 66.50 on Tuesday, down from an average 69.60 at the start of the week.

Redding Ridge prints CLO

Redding Ridge Asset Management priced $306.9 million of notes due April 15, 2031 in its broadly syndicated CLO offering, according to market sources.

SCFF 1 Ltd. sold $195 million of class A-1 floating-rate notes at Libor plus 250 bps at the top of the capital structure.

Natixis Securities Americas LLC was the placement agent.

The CLO is collateralized primarily by broadly syndicated first-lien senior secured loans.

The New York City-based asset management company was established in 2016 by Apollo Global Management, LLC.

CIFC prices euro notes

CIFC Asset Management closed Wednesday on the new €419.8 million CIFC European Funding CLO II DAC offering, according to market sources.

CIFC European Funding CLO II sold €248 million of class A senior secured floating-rate notes at Euribor plus 90 bps in the AAA-rated tranche.

Barclays was the placement agent.

CIFC CLO Management II, LLC will manage the CLO.

The notes are due April 15, 2033.

The offering is backed primarily by euro-denominated broadly syndicated senior secured obligations.

CIFC Asset Management is an investment adviser based in New York.

CSAM issues notes

Credit Suisse Asset Management sold €402.25 million of notes due Nov. 25, 2032 in its new issue deal, according to market sources.

Madison Park Euro Funding XV DAC priced €193 million of class A-1 floating-rate notes at Euribor plus 120 bps at the top of the capital structure.

Citigroup Global Markets Ltd. was the placement agent.

The CLO is backed primarily by euro-denominated senior secured loans.

Credit Suisse Asset Management is a subsidiary of Zurich-based Credit Suisse AG.

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