Redding Ridge offers euro CLO; AAA tranches widen; downgrades cause forced selling fears

By Cristal Cody

Tupelo, Miss., April 27 – Redding Ridge Asset Management (UK) LLP plans to issue €288.2 million of notes in the new Zinnia Finance DAC euro-denominated broadly syndicated CLO.

Meanwhile, the secondary market saw $931 million of BWIC volume last week, up from $772 million in the prior week, according to a BofA Securities, Inc. research note released Monday.

CLO AAA tranches widened 10 basis points on the week to Libor plus 220 bps on average, “with supply primarily in off-the run-shelves and lower notional size blocks,” while AA and A tranches were flat on the week, the BofA analysts said.

CLO BBB-rated and BB-rated tranches widened 25 bps and 50 bps week over week due to a reduced investor base as downgrade risks increase, the analysts said.

CLO tranche downgrades are causing “overblown” fears of forced selling by life insurance companies and money managers due to restrictions on BB-rated bonds, Wells Fargo Securities LLC analysts said in a note on Monday.

“It is our understanding that most life insurance companies would not sell upon a downgrade to BB, given current BBB tranche prices in low 80’s/high 70’s,” the analysts said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.