Ares LIV CLO prices 402.1 million for mid-November; Anchorage Credit Funding 9 CDO closes

Chicago, Nov. 1 – The primary market for collateralized paper was subdued on Friday, but domestic U.S. issuance picked up after a quiet Thursday.

Ares CLO Management LLC priced $402.1 million of notes in the new Ares LIV CLO Ltd./Ares LIV CLO LLC transaction.

And, in a CDO that is collateralized by corporate bonds and loans, Anchorage Capital Group, LLC closed on a new $405 million offering with Anchorage Credit Funding 9, Ltd./Anchorage Credit Funding 9, LLC listed as issuers.

In the secondary space, trading was active on Thursday, the last date for which data is available.

Approximately $550 million of trading took place in the CBO/CLO/CDO markets, according to Trace data.

In the investment-grade sector, $441.48 million exchanged hands at an average price of 96.3 in 80 trades.

And, in the non-investment-grade sector, $107.85 million of collateralized debt was traded for an average price of 89.5 in 45 trades.

Ares prices fourth CLO

In its fourth CLO of 2019, Ares CLO Management plans to close on its new portfolio on Nov. 15.

The new notes, which are over 85% ramped up, have a weighted average life of 5.2 years.

The weighted average spread is 3.46%.

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

Up to 7.5% of the assets can be rated by S&P Global Ratings with a credit rating of CCC+ or below.

The top two industries in the portfolio are health care providers and services and wireless telecommunication services.

The CLO is a standard waterfall CLO and is being arranged by Barclays.

Anchorage closes CDO

In the CDO market, Anchorage Capital will manage a new offering that closed yesterday.

Remarkably, the CDO contains a rated class of notes which are comprised of a combination of four of the note classes.

The four classes of notes are all of the class B-b notes, all of the class C-b notes, all of the class E-b notes and a portion of the subordinated notes.

According to Moody’s Investors Service, there are notable features for the structured notes.

For instance, there is no set interest rate and the notes “promise the repayment of the aggregate security balance,” according to Moody’s.

So, while it is a cash-flow CDO, there is an additional note structure that presents an alternative to the straight cash-flow structure with one additional interesting tweak to be explained next.

The CDO has the rated structured notes, which as stated above are a combination of four classes of notes, but it also has an additional section of class 1 residual structured notes.

These notes are not rated, and any proceeds from the underlying components of the four classes of notes will first be applied to the rated structured notes and then next be applied to the class 1 residual notes, in effect introducing a second waterfall.

The portfolio will be approximately 40% ramped as of the closing date.

European CLOs

Fitch Ratings issued a press release that refinancings and resets of European CLOs are picking up because the recent decline in senior spreads, as a trend.

According to Fitch, “for the first time since the beginning of 2018 ‘AAA’ spreads averaged 105.9 basis points over Euribor during 3Q19 versus 111.3 bps for 2Q19. ‘AAA’ spreads for transactions priced in the second half of September 2019 declined further to average 92.8 bp.”

According to the release, six CLOs have been refinanced and six have been reset.

New paper has also picked up. It is running approximately €500 million ahead of where it was at this point last year.

There are now 53 total managers in the European CLO market.

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