Secondary loan market unchanged to better with CLO interest picking up

By Sara Rosenberg

New York, Oct. 3 – The secondary market on Monday saw some increased activity from CLOs but generally speaking levels were unchanged to up a little bit on the day.

One example of a gain was Citrix Systems Inc.’s (Tibco Software Inc.) term loan B, which was quoted by one trader at 89¼ bid, 90¼ offered, up from 89 bid, 90 offered on Friday.

Pricing on the U.S. term loan B is SOFR+10 basis points CSA plus 450 bps with a 0.5% floor and it was sold at an original issue discount of 91, so the debt is still trading below its recent issue price.

Fort Lauderdale, Fla.-based Citrix is a provider of secure, unified digital workspace technology.

According to one trader, some lower quality loans were down by as much as a half a point and some higher quality loans were up by as much as half a point, which when combined, had the overall market pretty much unchanged on the day.

The trader explained that a lot of people have cash to put to use and there’s more CLO activity because of quarter end amortization, so some names, like Citrix, traded higher.

Another trader had the general secondary market flat to up a quarter of a point. This trader said trading volume was “lightish” but “CLOs nibbling and outflows are light.”

Stocks were up on Monday, with the Dow Jones Industrial Average closing up 765.38 points, or 2.66%, NYSE closing up 383.54 points, or 2.85%, and Nasdaq closing up 239.82 points, or 2.27%.

Fund flows

In other news, actively managed loan fund flows on Friday were negative $311 million and loan ETFs were negative $35 million, sources said.

Last week the leveraged loan mutual fund base had its second largest outflow of 2022 – $1.9 billion – with the past six weeks’ outflow totaling $6.9 billion or 7.8% of weekly AUM, sources added.

Inflows for loan funds year to date total $1.9 billion.

Loan indices

IHS Markit’s iBoxx Leveraged Loan indices (MiLLi) closed out Friday down 0.05% and its Liquid Leveraged Loan indices (LLLi) closed out the day up 0.03%.

Month to date, the MiLLi is down 2.20% and year to date its down 3.63%. The LLLi is down 2.44% month to date and down 4.80% year to date.

Average secondary market bids in the U.S. on Friday were 92.48, down 0.09% from the previous day and 4.51% year to date.

According to the IHS Markit data, some of the top advancers on Friday were Learfield Communications’ December 2016 covenant-lite term loan B at 81.71, up from 78, HealthChannels’ April 2018 covenant-lite term loan at 83.50, up from 80, and Sterigenics-Nordion/Sotera’s January 2021 covenant-lite term loan at 87.50, up from 85.50.

Some top decliners on Friday were Genesis Care’s March 2020 U.S. covenant-lite term loan B at 39, down from 45.75, Heritage Power’s July 2019 term loan at 31.50, down from 34.60, and Carnival’s June 2020 U.S. term loan B at 90.50, down from 92.92.

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