CLO middle-market space heats up; market eyes potential growth in deal volume in 2019

By Cristal Cody

Tupelo, Miss., Nov. 16 – The middle-market CLO space is expected to remain active headed into the year-end with volume also forecasted to rise in 2019.

In addition to Guggenheim Partners Investment Management LLC’s $402.5 million middle-market CLO deal currently in the pipeline, Barings LLC also was offering $403 million of notes in a middle-market offering via Natixis Securities Americas LLC, sources said. Additional details regarding the Barings Middle Market CLO Ltd. 2018-I/Barings Middle Market CLO 2018-I LLC deal were not immediately available.

More than $12 billion of middle-market CLOs have priced year to date, while about 15 vintage middle-market CLOs have been refinanced so far this year, according to informed sources.

The year “has marked an active year for the MM CLO market, as three new managers have entered the market, and a total of 14 have issued year to date,” Wells Fargo Securities LLC analysts said in a research note released on Friday. “We expect increased MM issuance – potentially from BDCs – in the upcoming year.”

Middle-market CLO volume has made up a growing share of overall issuance over the past three years, from a 6% average from 2011 through 2015 to an 11% to 12% average from 2016 through 2018, according to the note.

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