August CLO issuance 60% higher over July; Apollo's $1.8 billion sold in two CLOs ups tally

By Cristal Cody

Tupelo, Miss., Aug. 21 - CLO issuance soared in August compared to July's pipeline on the back of two large deals brought by Apollo Credit Management LLC, according to market sources.

Apollo Credit Management priced about $1.8 billion and sold the AAA-rated tranches in the ALM VII(R), Ltd./ALM VII(R), LLC and ALM VII(R)-2, Ltd./ALM VII(R)-2, LLC CLOs at Libor plus 133 basis points as CLO spreads moved tighter over the month, sources said.

CLO issuance year to date stands at $52.3 billion. Managers have priced $5.4 billion of deals so far in August, 60% more than in July, Dave Preston, senior analyst at Wells Fargo Securities, LLC, said in a note.

"The issuance figure is slightly higher due to two large deals that were somewhat nonstandard compared to other new issue CLOs," he said. "However, even if that pair is excluded, August volume is still more than July's. AAA spreads also appear to have stabilized and may be slightly tighter than in early August."

Apollo prices $1.8 billion

In the ALM VII(R) collateralized loan obligation, Apollo Credit Management sold $857.06 million of notes due April 5, 2024, according to market sources.

The CLO manager priced $498.85 million of class A-1 senior secured floating-rate notes (Aaa/AAA/) at Libor plus 133 bps; $95.95 million of class A-2 senior secured floating-rate notes (/AA/) at Libor plus 185 bps; $77.1 million of class B senior secured deferrable floating-rate notes (/A/) at Libor plus 260 bps; $55.05 million of class C senior secured deferrable floating-rate notes (/BBB-/) at Libor plus 345 bps; $25.78 million of class D secured deferrable floating-rate notes (/BB-/) at Libor plus 500 bps; $24.38 million of class E secured deferrable floating-rate notes (/B/) at Libor plus 500 bps and $80 million of subordinated notes in the equity tranche.

Apollo sold $932.22 million of notes due April 5, 2024 in the ALM VII(R)-2 CLO.

ALM VII(R)-2 priced $543.18 million of class A-1 senior secured floating-rate notes (Aaa/AAA/) at Libor plus 133 bps; $104.48 million of class A-2 senior secured floating-rate notes (/AA/) at Libor plus 185 bps; $83.95 million of class B senior secured deferrable floating-rate notes (/A/) at Libor plus 260 bps; $59.95 million of class C senior secured deferrable floating-rate notes (/BBB-/) at Libor plus 345 bps; $28.05 million of class D secured deferrable floating-rate notes (/BB-/) at Libor plus 500 bps; $26.53 million of class E secured deferrable floating-rate notes (/B/) at Libor plus 500 bps and $86.18 million of subordinated notes.

J.P. Morgan Securities LLC was the underwriter on both deals.

The CLO manager is a subsidiary of Apollo Global Management, LLC.

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