Audax sells $499.56 million debut CLO; middle market active; CSAM prices $596.65 million

By Cristal Cody

Tupelo, Miss., June 3 – The CLO middle-market space is picking up steam in 2019 with new managers in the primary market.

Audax Management Co. (NY) LLC priced a $499.56 million deal in the manager’s first CLO deal. The CLO is backed by a combination of broadly syndicated and middle-market first-lien senior secured loans.

First-time issuer FS KKR Capital Corp. also priced a new middle-market CLO offering, FS KKR MM CLO 1 LLC, a source said. Citigroup Global Markets Inc. was the placement agent. Final pricing details were not immediately available.

The CLO middle market has seen $6.1 billion of supply year to date across 13 deals, according to a BofA Securities research report released on Monday.

Four new managers have tapped the primary market so far this year, the report said.

The year “is on track to mark the third straight year of $14+ [billion] supply for the market,” the BofA Securities analysts said. “Strong issuance has pushed the outstanding size of the sector to over $50 [billion].”

CLO middle-market volume has seen about 12% of broadly syndicated CLO issuance this year.

“At the top of the capital structure, new issue MM CLO spreads have widened on the year, meaning that at the AAA level, new issue MM CLOs now offer a spread pick-up of around 40 [basis points] over broadly syndicated AAAs – greater than that for most of last year,” the analysts said.

New CLO middle-market AAA spreads ended May in general in the Libor plus 165 bps area, according to a Wells Fargo Securities, LLC research note on Friday.

Broadly syndicated CLO primary AAAs were on average in the Libor plus 130 bps area. In the refinancing space, broadly syndicated AAAs ended May on average in the Libor plus 112 bps area, Wells Fargo said.

Elsewhere, in broadly syndicated primary action, Credit Suisse Asset Management, LLC priced $596.65 million of notes in the manager’s third new dollar-denominated CLO transaction of the year.

Audax debuts in primary

Audax Management priced $499.56 million of loans and notes due April 22, 2029 in the manager’s first middle-market CLO deal, according to market sources.

At the top of the capital structure, Audax Senior Debt CLO I LLC sold $310.5 million of class A loans at Libor plus 195 bps and $34.5 million of class A floating-rate notes at Libor plus 195 bps.

Wells Fargo Securities, LLC was the placement agent.

The deal is backed by broadly syndicated and middle-market first-lien senior secured loans.

Audax Management is a private equity firm and part of Boston-based middle-market investment firm Audax Group, Inc.

CSAM brings XXXVII CLO

Credit Suisse Asset Management priced $596.65 million of notes due July 15, 2032 in the Madison Park Funding XXXVII Ltd./Madison Park Funding XXXVII LLC CLO transaction, according to a market source.

The CLO sold $375 million of class A-1 floating-rate notes at Libor plus 130 bps and $15 million of class A-2 floating-rate notes at Libor plus 165 bps in the senior tranches.

Wells Fargo was the placement agent.

The notes are collateralized primarily by broadly syndicated first-lien senior secured loans.

The CLO manager has priced three new dollar-denominated deals and refinanced one vintage CLO transaction year to date.

Credit Suisse Asset Management is a unit of Credit Suisse Group AG.

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