OZLM XIV CLO and CIFC Funding 2016-1 refinance in CLO market Friday

Chicago, Sept. 13 – Two vintage portfolios repriced in the Friday CLO market in a day with no truly new paper surfacing.

CIFC Funding 2016-I Ltd./CIFC Funding 2016-I LLC reset a vintage transaction for $514.35 million, managed by CIFC CLO Management LLC.

And, refinancing five classes of notes OZLM XIV, Ltd./OZLM XIV LLC priced $396 million with the new name of its collateral manager Sculptor Loan Management LP, formerly known as Och-Ziff.

Secondary volume trading numbers increased throughout the latter part of the week.

Friday’s volume for secondary trading for the CBO/CDO/CLO market was in line with previous numbers for the investment grade sector, but the highest in the month for the non-investment grade sector.

High grade trading, according to Trace data, was at $228.01 million with an average price of 98.8.

The non-investment grade sector was $1,001,917,200 at an average price of 85.7.

CIFC reprints

CIFC Funding 2016-I priced on Friday as CIFC’s fifth CLO in 2019.

With this transaction, the firm now manages $16.66 billion in assets.

In this portfolio, 92.5% of the loans are backed by senior secured loans.

A maximum of 60% of the loans can be covenant-lite.

The portfolio’s weighted average spread was 349 basis points, higher than the three-month average of 344 bps.

The excess spread was 147 bps, lower than the 156 bps three-month average, according to S&P Global Ratings.

The weighted average recovery rate was lower than the three-month average of S&P-rated deals in the three months ending Aug. 30.

The portfolio is 98.66% ramped up with 371 obligors.

OZLM XIV refinances

Five classes of notes were refinanced in the OZLM XIV deal.

The revised indenture, like several recently, included Libor fallback language.

The deal is still conditional upon a majority of noteholders of the subordinated notes providing their consent.

The proposed date of execution is Oct. 3.

Tokyo conference

Fitch Ratings held its 2019 Global CLO and Leveraged Finance Conference in Tokyo during the Sept. 9 week.

The agency polled investors at the conference to see what the largest factors were for determining the appetite for investing in a product.

Credit quality came in first place with 43% of respondents saying it was the most important.

Credit spreads were number two at 40%.

In terms of credit spread “there is a tightening bias on the average spread,” according to Fitch.

“Market sentiment improved somewhat in 2019, although neither lenders, nor issuers, have been able to reliably hold on to ability to prevail in negotiations. Success has been largely driven by market technicals in general, and demand for individual transactions in particular,” said Lyuba Petrova, Fitch's senior director in US leveraged finance.

Other options in the survey were regulatory scrutiny, manager selection, documentation weakening, geopolitical factors and Libor cessation.

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