CLO deal forecast strong; Intermediate Capital eyes €414 million CLO; secondary flat

By Cristal Cody

Tupelo, Miss., Nov. 13 – New CLO deal volume already has topped $100 billion for 2017 with pricing action expected to remain strong in the year ahead, according to market sources.

About $102 billion of new CLOs have priced year to date, BofA Merrill Lynch analysts said in a note released on Monday.

BofA Merrill Lynch forecasts 2018 CLO issuance to hit $110 billion in 2018.

Both the U.S. and European primary markets have been active in November, according to market sources.

Intermediate Capital Managers Ltd. plans a €414 million euro CLO offering.

Securitized secondary market activity was light on Monday and moderate in the previous week, sources said.

BWIC volume totaled about $330 million in the past week with spreads overall unchanged on the week, BofA Merrill Lynch analysts said in the note.

“Bids were strong given limited supply,” the analyst said. “Other recently refi/reset bonds which traded at above par levels in the secondary market likely reflect some accounts’ desire to monetize a quick profit after picking these bonds up at par in the primary market.”

U.S. dollar AAA-rated spreads were unchanged at Libor plus 100 basis points, while euro CLO AAAs were flat on the week at Euribor plus 81 bps, the note said.

Intermediate Capital eyes CLO

Intermediate Capital Managers is expected to price €414 million of notes due Jan. 17, 2031 in the St. Paul’s CLO VIII DAC transaction, according to a market source.

The deal includes €244 million of class A senior secured floating-rate notes (Aaa//AAA); €27 million of class B1 senior secured floating-rate notes (Aa2//AA); €20 million of class B2 senior secured floating-rate notes (Aa2//AA), €23 million of class C senior secured deferrable floating-rate notes (A2//A); €21 million of class D senior secured deferrable floating-rate notes (Baa2//BBB), €25 million of class E senior secured deferrable floating-rate notes (Ba2//BB), €12 million of class F senior secured deferrable floating-rate notes (B2//B-) and €42 million of subordinated notes.

Merrill Lynch International is the placement agent.

Intermediate Capital Managers, a London-based investment management firm, has priced one new CLO deal and refinanced two vintage CLOs year to date.

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