April CLO primary market quiet; AAAs improve 5 bps; BB, B notes tighten 25 bps

By Cristal Cody

Eureka Springs, Ark., April 11 – CLO primary action remains quiet in April with one deal priced so far in the month, while mezzanine spreads continue to improve in the secondary market, according to sources on Monday.

“The first new issue CLO of 2Q2016 priced on Friday, which was a European deal worth €410 [million],” J.P. Morgan Securities LLC analysts said in a note.

CELF Advisors LLP priced the €410 million Carlyle Global Market Strategies Euro CLO 2016-1 Designated Activity Co. transaction on Friday, as previously reported, via Citigroup Global Markets Inc.

Year to date, $13.56 billion of CLOs have priced, including $6.75 billion of U.S. broadly syndicated deals, $509 million of refinanced tranches, $826 million of middle-market issuance and €2.78 billion of European CLO volume, according to JPMorgan.

In the secondary market, 3.0 CLO BB-rated and B-rated notes both came in 25 basis points over the past week, JPMorgan said. BBs are trading at Libor plus 875 bps, 50 bps tighter year to date.

B spreads were quoted in the secondary market at Libor plus 1,350 bps, 225 bps tighter year to date.

AAA-rated notes ended the past week 5 bps better at Libor plus 160 bps.

BWIC volumes totaled more than $500 million for the previous week, according to a BofA Merrill Lynch note.

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