Redding Ridge, Permira price euro CLOs; senior spreads improve; more downgrades eyed

By Cristal Cody

Tupelo, Miss., April 28 – Two CLO managers priced new euro-denominated CLOs, while the dollar-denominated market also is opening back up in April as states and governments start to ease coronavirus-related restrictions.

Redding Ridge Asset Management (UK) LLP priced €288.2 million of notes in the manager’s first euro-denominated broadly syndicated CLO transaction of the year.

Permira Debt Managers Group Holdings Ltd. also priced a new €207.6 million broadly syndicated CLO in the manager’s first deal since 2019.

Euro CLO spreads reached their widest levels since 2012 in March with AAA through BBB spreads recovering 140 basis points to 175 bps this month, while BB euro tranches are flat, according to a Wells Fargo Securities LLC report.

Dollar-denominated CLO AAA through A spreads have tightened 155 bps to 300 bps month over month, the Wells Fargo analysts said.

CLO BBB and BB spreads have firmed 400 bps to 500 bps over the past month.

“We think that CLO AAAs moved wider in March due to heavy secondary supply, often from money managers, and because of relatively high dollar prices, even after over 100 bps of spread widening,” the Wells Fargo analysts said. “We think the market may be underestimating the risk of downgrades on BBB tranches.”

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