CLO trading remains quiet so far this year; Tralee prices $409.2; Neuberger Berman refinances

By Rebecca Melvin

New York, Jan. 11 – The CLO market has seen quiet trading so far this year but new issues continue to trickle in and expectations for new issuance remain unchanged, according to market sources.

The U.S. tax reform law is credit positive for the near term, according to Bank of America Merrill Lynch.

“We reiterate our overweight stance on US CLOs,” the bank said. But “after a strong 2017, CLOs largely stopped trading, and we show spreads unchanged over the past few weeks.”

Nevertheless, the bank says that CLOS “will play catch-up and tighten relative to other sectors as trading activity picks up in the near term. We expect spread tightening as trading picks up.”

In new issue action, Par-Four Investment Management LLC priced $409.2 million of notes due Jan. 20, 2030 in the new Tralee CLO IV, Ltd. transaction and Neuberger Berman Investment Advisers LLC priced $550.875 million of notes due Jan. 15, 2028 in the new Neuberger Berman CLO 26-S Ltd./Neuberger Berman CLO 26-S LLC, a transaction that represents a refinancing of the Neuberger Berman Loan CLO 26, Ltd.

The Tralee deal includes $256 million of class A floating-rate notes at the top of the stack that priced at a discount margin of Libor plus 119 basis points. There were also $49.5 million of class B floating-rate notes at a discount margin of Libor plus 165 bps.

Based in Woodcliff, N.J., the Par-Four managed CLO is collateralized primarily by broadly syndicated senior secured corporate loans.

The new Neuberger Berman CLO sold $3 million class X floating-rate notes at a discount margin of Libor plus 60 basis points and $357.50 million of class A floating-rate notes at a discount margin of Libor plus 85 bps.

Proceeds will be used to repurchase the Neuberger Berman CLO 26.

The transaction will be collateralized at least 90% by senior secured loans, with a minimum of 90% of the loan issuers required to be based in the United States or Canada.

Chicago-based Neuberger Berman Investment Advisors currently manages 12 CLOs and has $5.5 billion in total CLO assets under management.

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