Investment-grade CLO spreads predicted to continue to compress in 2018; Golub CLO prices

By Rebecca Melvin

New York, Dec. 14 – The spreads on high-grade CLO notes are predicted to continue to compress in 2018 as investors’ hunt for yield remains a theme, especially those rated AAA to BBB, Fitch Ratings said in a report.

Spreads on notes issued by broadly syndicated loan CLOs have declined during 2017, with BBB-rated issues seeing the biggest compression within investment-grade securities.

Spreads on AAA-rated CLO notes, which represent the bulk of issuance, or 62% median contribution in Fitch-collected data, have declined on average by over 35 basis points through 2017, data shows.

AA and A level notes, which are around 11% and 6% of issuance, respectively, have had spreads contract nearly 40 bps and 102 bps on average.

Average BBB note spreads have compressed by more than 145 bps over the year, though it is a small overall contribution to the total structure, at around 5% of issuance, according to Fitch.

Golub Capital CLO prices

Opal BSL LLC priced a $508.53 million CLO offering of notes due 2031, according to a market source.

Golub Capital Partners CLO 22 (B)-R/Golub Capital Partners CLO 22 (B)-R LLC sold $320 million of class A-R senior secured floating-rate notes (//AAA) at Libor plus 118 bps at the top of the capital stack.

The CLO will be managed by Opal BSL LLC.

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