Five Arrows prices $302.75 million; Fortress brings CLO; pandemic impacts middle-market

By Cristal Cody

Tupelo, Miss., July 1 – The broadly syndicated and middle-market CLO spaces are seeing new primary action.

Five Arrows Managers North America LLC priced a $302.75 million broadly syndicated deal in the manager’s first offering of 2020 in the Ocean Trails CLO 8/Ocean Trails CLO 8 LLC transaction.

The CLO included $180 million of class A-1 floating-rate notes priced at Libor plus 195 basis points at the top of the capital structure.

Fortress Investment Group LLC sold $390 million of notes in a new static middle-market CLO.

The deal is the manager’s first transaction of the year, following two broadly syndicated CLO deals it priced in 2019.

Fortress Credit Opportunities XIII CLO Ltd./Fortress Credit Opportunities XIII CLO LLC priced $220 million of class A floating-rate notes at Libor plus 225 bps in the AAA-rated tranche.

Middle-market CLO supply has thinned amid the Covid-19 pandemic impact.

Year to date, more than $30 billion of new dollar-denominated broadly syndicated CLOs have priced, while middle-market volume totals about $3 billion, sources said.

Moody’s Investors Service said in a report on Wednesday that the credit quality of collateral backing middle-market CLOs that it rates is declining as a result of Covid-19-related economic shocks.

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