Neurberger Berman preps deal; Carlyle to reset CLO; resets ‘more difficult’ after Dec. 24

By Cristal Cody

Eureka Springs, Ark., Aug. 17 – Two more CLO managers joined the deal pipeline.

Neuberger Berman Investment Advisers LLC is offering a $409 million CLO transaction.

Carlyle Investment Management LLC is set to bring a reset refinancing transaction of its $615.9 million Carlyle Global Market Strategies CLO 2012-3, Ltd./Carlyle Global Market Strategies CLO 2012-3 LLC deal.

Reset transactions will be “considerably more difficult after Dec. 24 this year since they would have to comply with risk retention,” Deutsche Bank Securities Inc. analyst Bjarni Torfason said in a note on Wednesday.

A reset of a vintage CLO includes the refinancing of all its liabilities and also extends other parts, such as the maturity, reinvestment period, non-call period and weighted average life test, he said.

“In past years the length of the extensions have varied but the purest version of the reset can be thought to be when the reinvestment period and weighted average are extended by four years and a new two-year non-call period added,” Torfason said. “This way the CLO can be restructured to have most of the attributes of a new issue CLO while keeping the assets in place and not having to go through liquidation of the old CLO and then ramping up a new one. Last year there were four CLO resets by our count and earlier this year we saw the only reset this year.”

Vintage 2012 and 2013 CLOs are the most likely candidates for reset refinancings, according to the note.

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