CLO primary reopens; Neuberger Berman prices $602 million deal; CLO refinancings resume

By Cristal Cody

Tupelo, Miss., Feb. 4 – Neuberger Berman Loan Advisers LLC priced $602 million of notes in a new broadly syndicated CLO as the primary market begins to show more signs of activity in the new year.

Several issuers priced transactions in late January after volatility in December sent spreads wider and kept issuers at bay for most of the month.

Neuberger priced its AAA-rated tranche of notes at Libor plus 133 basis points.

PPM Loan Management Co., LLC was in the primary market last week as previously reported with a $405.6 million CLO deal via Goldman Sachs & Co. LLC.

PPM CLO 2, Ltd. priced its $256 million tranche of class A loans at Libor plus 150 bps.

New issue weighted average spreads are “coming in a range of 133-150 [bps],” according to a BofA Merrill Lynch analyst research note released on Monday.

“Enduring market scrutiny on leveraged loan fundamentals, and consequently CLOs, continued to contribute to pronounced manager tiering in the primary market, in particular pressuring debt costs for new managers with limited performance history,” the analysts said.

CLO refinancings also are beginning to resume albeit at a slow pace with three vintage CLOs refinanced in January, compared to the 29 deals this same time last year, according to the report.

BofA Merrill Lynch analysts in January lowered their refinancing and reset volume forecast for 2019 by nearly half to $55 billion on the back of wider primary spreads.

Neuberger prices

Neuberger Berman Loan Advisers priced $602,005,000 of notes due Jan. 19, 2032 in the Neuberger Berman Loan Advisors CLO 32, Ltd./Neuberger Berman Loan Advisors CLO 32, LLC transaction, according to a market source.

The CLO sold $366 million of class A floating-rate notes (Aaa/AAA) at Libor plus 133 bps and $84 million of class B floating-rate notes (AA) at Libor plus 185 bps in the senior secured tranches.

Wells Fargo Securities, LLC was the placement agent.

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

Neuberger Berman is a Chicago-based investment management firm and affiliate of Neuberger Berman Group, LLC.

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