Redding Ridge prices €394 million CLO; primary AAAs firm; high-grade secondary volume up

By Cristal Cody

Tupelo, Miss., Oct. 2 – The European primary market remains active with a new CLO offering from Redding Ridge Asset Management (UK) LLP.

Redding Ridge Asset Management (UK) priced €394 million of notes in the manager’s third euro-denominated broadly syndicated CLO deal of 2020.

More than €14 billion of euro-denominated CLOs have priced year to date, while about $60 billion of dollar-denominated CLOs have priced so far this year, according to market sources.

About $70 billion of dollar-denominated supply is now expected for the year, Wells Fargo Securities, LLC said in a note on Friday.

Deal volume was the strongest in September in the dollar space as some CLOs showed “characteristics of pre-coronavirus deals,” according to a Fitch Ratings report on Friday. “September saw CLOs price with five-year reinvestment periods for the first time since March, and spreads had a tightening bias.”

The average reinvestment period increased to 3.4 years in September from two- to three-year periods seen since mid-March due to the Covid-19 pandemic, Fitch said.

CLO AAA tranches structured with a one-year non-call period and a three-year reinvestment period have priced between Libor plus 125 basis points and Libor plus 140 bps in September versus Libor plus 165 bps to 175 bps in June, Fitch said.

Dollar-denominated CLO AAA through BB primary spreads tightened 15 bps to 50 bps in September, the Wells Fargo analysts said.

Secondary AAA spreads firm

In the secondary market, CLO AAA and AA tranches firmed 2 bps to 5 bps month over month, while A-rated tranches and BBB issues widened 5 bps to 15 bps, according to the Wells Fargo note.

CLO BB spreads were unchanged on the month.

Euro-denominated CLO AAA through BB primary spreads firmed across the stack over September by 35 bps to 75 bps, the analysts said.

Elsewhere, secondary trading ramped up this week with $828.36 million of high-grade CBO/CDO/CLO issues traded on Thursday at an average price of 95.70, along with $174.45 million of lower-rated tranches that averaged 90 over the session, according to Trace.

Trading volume totaled $307.86 million in high-grade issues at an average price of 97.90 and $156.48 million in non-investment-grade tranches at an average price of 82.30 on Wednesday.

Earlier in the week, secondary high-grade CBO/CDO/CLO supply totaled $471.1 million on Tuesday from $322.37 million on Monday with issues averaging 98.10 over the sessions.

Further down the capital structure, $113.68 million of lower-rated CBO/CDO/CLO issues were traded on Tuesday an average 88.40, while $76.72 million was traded at the start of the week at a 92.70 average.

Redding Ridge’s deal

Redding Ridge Asset Management (UK) priced €394 million of notes due Oct. 15, 2033 in the new CLO offering, according to market sources.

RRE 5 Loan Management DAC sold €232 million of class A-1 senior secured floating-rate notes at Euribor plus 110 bps at the top of the capital stack.

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

The notes are collateralized primarily by broadly syndicated senior secured leveraged loans and bonds.

Redding Ridge has priced three new euro-denominated CLOs year to date.

The London-based firm is part of Redding Ridge Asset Management, LLC, a New York City-based asset management company established in 2016 by Apollo Global Management, LLC.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.