BlackRock prices $500.25 million CLO; new AAA spreads soft; loans see first inflows

By Cristal Cody

Tupelo, Miss., March 1 – BlackRock Financial Management, Inc. sold $500.25 million of notes in the firm’s first CLO deal of the year.

More than $15 billion of dollar-denominated CLOs and over €2 billion of European CLOs have priced year to date.

Volume has picked up but new issuance is being hampered by wider spreads in 2019, Fitch Ratings said in a report on Friday following an industry conference earlier in the week.

“New CLO activity is showing signs of life but momentum is tempered by widening liability spreads not being matched by increases in loan spreads,” Fitch said market participants reported at the Structured Finance Industry Group conference that ended on Wednesday. “There is some holding back from the new issue market as participants wait for more solid footing on liability pricing discovery.”

Fitch notes that nearly all AAA-rated new issue and refinanced broadly syndicated CLOs have priced above Libor plus 130 basis points in February, up from the Libor plus 121 bps average for CLOs priced in December.

On Feb. 22, Onex Credit Partners, LLC priced the $163.93 million AAA-rated tranche in its $505.1 million OCP CLO 2019-16 Ltd./OCP CLO 2019-16 LLC transaction at Libor plus 140 bps.

Canyon CLO Advisors LLC’s $404.9 million Canyon Capital CLO 2019-1, Ltd. vehicle sold $256 million of its class A notes at Libor plus 137 bps on Feb. 19.

BlackRock, a seasoned CLO manager, was among the exceptions this month and brought its senior notes at Libor plus 128 bps.

In other market action, leveraged loans saw the first inflow since the week ended Nov. 14, Yuri Seliger, an analyst with BofA Merrill Lynch, said in a research report released Friday.

Loans had a small $50 million inflow for the week ended Feb. 27, following a $770 million outflow in the previous week.

BlackRock brings CLO

BlackRock Financial Management sold $500.25 million of notes due April 20, 2030 in the CLO deal, according to a market source.

Magnetite XXI, Ltd./Magnetite XXI LLC priced $332.5 million of the class A floating-rate notes at Libor plus 128 bps.

Citigroup Global Markets Inc. was the placement agent.

The CLO is collateralized mainly by first-lien senior secured loans.

BlackRock is an investment management firm based in New York City.

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