CLO primary supply rises; Invesco raises $512.5 million; MCF prices; AA spreads widen

By Cristal Cody

Tupelo, Miss., Oct. 20 – Details emerged on deals brought by CLO managers Invesco Senior Secured Management, Inc. and MCF Capital Management LLC, while the market may be at risk of oversupply following more than $100 billion of issuance year to date, sources report.

In the $512.5 million Limerock CLO III Ltd./Limerock CLO III LLC offering from Invesco Senior Secured Management, the firm priced $315 million of AAA notes at Libor plus 153 basis points and $35.5 million of Aa2-rated notes at Libor plus 230 bps.

Credit Suisse Securities (USA) LLC arranged the offering.

Invesco Senior Secured Management, a subsidiary of Atlanta-based Invesco, Ltd., has brought three CLO transactions year to date.

MCF Capital Management placed the $405.96 million MCF CLO IV LLC middle-market deal via Wells Fargo Securities LLC.

The $228.5 million AAA-rated tranche of notes priced at Libor plus 170 bps, while the $34.25 million AA slice came at Libor plus 245 bps.

The deal is the first transaction in 2014 for the Laguna Hills, Calif.-based middle market loan firm.

CLO spreads have widened following the strong deal calendar, and AAAs are unlikely to tighten before the end of the year, J.P. Morgan Securities LLC analysts said in a note.

“Investor fatigue with oversupply has been brewing for some time,” the analysts said. “Primary AAs have widened to [Libor plus] 250 bps, a nearly 100 bp differential to AAAs and up from barely 60 bps in June.”

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