Credit Suisse Asset offers $504.75 million deal; CLOs under pressure; secondary pace light

By Cristal Cody

Tupelo, Miss., Feb. 19 – CLO primary action for March is looking stronger with a new U.S. deal expected to price from Credit Suisse Asset Management, LLC, according to market sources on Friday.

Credit Suisse Asset Management plans to price a $504.75 million CLO.

Neuberger Berman Fixed Income LLC, Crestline Denali Capital, LP, Prudential Investment Management, Inc. and CreekSource LLC also are in the deal pipeline.

CLO primary action has been light year to date.

Two U.S. broadly syndicated CLOs totaling $826 million and one $348,006,000 middle-market-backed CLO deal have priced year to date, according to Prospect News data.

CLOs are “under pressure,” and energy defaults are likely in the near term, Barclays analysts said in a note on Friday.

“Markets stabilized this week as oil rallied following OPEC talks about a production freeze,” the analysts said. “Despite the jump, oil prices are still 24% below where they were when we made our forecasts for 2016 returns at the beginning of December.”

Barclays revised its 2016 loan total return forecast down to 3% to 4% from 5% to 6%.

Secondary trading has been light over the week and concentrated in the U.S. AAA and mezzanine tranches, a market source said.

CSAM preps CLO

Credit Suisse Asset Management plans to price $504.75 million of notes due 2027 in the Madison Park Funding XX Ltd./Madison Park Funding XX LLC transaction, according to a market source.

The Madison Park Funding XX deal is expected to include $310 million of class A senior secured floating-rate notes (Aaa/AAA); $57.3 million of class B senior secured floating-rate notes (Aa2); $40.8 million of class C secured deferrable floating-rate notes (A2); $25.4 million of class D secured deferrable floating-rate notes (Baa3); $26.5 million of class E secured deferrable floating-rate notes (Ba3) and $44.75 million of subordinated notes.

J.P. Morgan Securities LLC is the placement agent.

Credit Suisse Asset Management will manage the CLO.

The CLO has a two-year non-call period and a five-year reinvestment period.

The transaction is backed primarily by broadly syndicated first-lien senior secured corporate loans.

The deal is expected to close on April 7.

Credit Suisse Asset Management brought four U.S. CLO deals and refinanced one vintage CLO transaction in 2015, including the $609.75 million Madison Park Funding XIX Ltd./Madison Park Funding XIX LLC offering on Dec. 2.

The New York-based investment manager is a unit of Credit Suisse Group AG.

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