Northwoods prices €204.7 million; CLOs, securitized products see positive June returns

By Cristal Cody

Tupelo, Miss., July 6 – Northwoods European CLO Management, LLC priced a €204.7 million CLO in the firm’s first euro-denominated deal since September 2019.

More than €10 billion of euro-denominated CLOs have priced year to date, with the market projected to post about €15 billion of volume in 2020.

Meanwhile, CLOs saw positive returns in June, according to a BofA Securities, Inc. research note released on Monday.

“All securitized credit sectors we track delivered positive total and excess returns in June as the U.S. economy continues to reopen,” BofA analysts said. “AAA securitized products underperformed corporates in June on both a total and excess return basis.”

In June, high-grade corporates delivered total returns of 2% and excess returns versus swaps of 1.8%, while AAA securities products yielded total returns 0.9% and excess returns versus swaps of 0.8%, according to the note.

“CRT, CMBS, and CLOs drove the down-in-credit securitized product rally in June: BB CLOs delivered total returns of 13.4%, BBB CMBS returned 6.9%, while low-LTV CRT B1s delivered returns in the 19.9%-20.2% range and high-LTV CRT B1s delivered returns in the 25.2%-27.5% range.”

The longer-term outlook is bullish, but due to Covid-19 and the upcoming presidential election, “we would not be surprised to see a significant risk-off, spread widening event in H2 2020, perhaps as early as July,” the analysts said. “We do not expect it to be as severe as the March risk-off move. Securitized products credit will likely largely continue to follow moves in IG and HY corporate bonds.”

Northwoods prints CLO

Northwoods European CLO Management priced €204.7 million of notes due June 16, 2033 in the CLO offering, according to market sources.

Northwoods Capital 21 Euro DAC sold €106 million of class A senior secured floating-rate notes at Euribor plus 150 basis points in the AAA-rated tranche.

BofA Securities Europe SA arranged the transaction.

The CLO is backed primarily by broadly syndicated first-lien senior secured corporate loans and bonds.

Northwoods European CLO Management is a subsidiary of New York-based alternative investment manager Angelo, Gordon & Co., LP.

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