Regatta prices $513 million CLO; some CLOs trade following end of risk retention rules

By Cristal Cody

Tupelo, Miss., May 21 – New CLO issuance includes a $513 million offering from Regatta Loan Management LLC in the manager’s first deal of the year.

Elsewhere, now that risk retention requirements for U.S. CLOs have been removed, some tranches are appearing in the secondary market, according to a BofA Merrill Lynch report released Monday.

“Following the passing of the deadline for the regulatory agencies to petition the Supreme Court regarding the DC Circuit Court's decision to exempt open-market U.S. CLOs from risk retention, full or partial vertical risk retention strips for three U.S. CLO deals appeared on BWIC lists this week,” the analysts said.

The list consisted of 5% stakes across all tranches of two CLOs from Trimaran Advisors, LLC and a 5% stake in the debt tranches of BlueMountain CLO 2013-1 Ltd./BlueMountain CLO 2013-1 LLC, according to the note.

“This follows the appearance of a vertical strip for all debt tranches in Gallatin CLO VIII on a BWIC list in April, while there is a BWIC containing vertical strips, minus the equity tranche, of MountainView CLO 2013-1 and MountainView CLO 2017-2 next Monday,” the analysts said.

“Altogether the aforementioned BWIC lists consisted of tranches with a total principal balance of $147 [million],” according to the note. “This total, however, understates the total amount of vertical risk retention strips which managers have offloaded; color we receive from investors indicates that several other managers have already offloaded a sizable portion of their outstanding vertical risk retention strips off of BWIC.”

Regatta brings XI CLO

Regatta Loan Management priced $513 million of notes due July 17, 2031 in the new Regatta VIII Funding Ltd./Regatta VIII Funding LLC deal, according to a market source.

Regatta VIII Funding sold $320 million of class A senior secured floating-rate notes at a discount margin of Libor plus 197 basis points in the senior tranche.

Morgan Stanley & Co. LLC arranged the deal.

Regatta Loan Management is a New York-based asset management firm.

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