Anchorage CLO prices; desks ‘swamped’ with uncertainty; action may slow on wait-and-see mood

By Cristal Cody

Eureka Springs, Ark., June 24 – Anchorage Capital Group, LLC tapped the CLO primary market with a $408.39 million deal amid the market volatility surrounding Brexit in the firm’s first offering of 2016.

“The desk is completely swamped with the new market uncertainty,” one source said on Friday.

CLO market participants spent Friday digesting Britain’s vote to leave the European Union and how the move affects the primary and secondary markets in the United States and Europe.

Wells Fargo Securities LLC analysts said in a note on Friday that the main Brexit risks to U.S. CLO investors are price volatility and a potential increase in recession probability.

“Middle-market collateral may be more protected from U.K. and European risks, but a small number of specific borrowers may have outsized exposure, due to reliance on specific European/U.K. suppliers or customers,” the analysts said. “We believe that the reaction will be more pronounced in more liquid sectors and that U.S. and Euro CLO secondary trading and primary issuance may slow as investors wait to see how changes in market sentiment will filter down to the CLO market.”

In its deal, Anchorage Capital Group priced $408.39 million of notes due July 28, 2028 in the Anchorage Capital CLO 8, Ltd./Anchorage Capital CLO 8, LLC deal, according to a market source.

Deutsche Bank Securities Inc. arranged the transaction.

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