Mackay Shields Investment sells debut €358.8 million CLO; Carlyle, BNPP eye redemptions

By Rebecca Melvin

New York, Sept. 27 – Pricing was heard on Mackay Shields Investment Management Ltd.’s debut collateralized loan obligation, a €358.8 million transaction of notes due 2032, on Friday.

The New York-based investment company priced €217 million of class A senior secured floating-rate notes at Euribor plus 93 basis points at the top of the capital stack in the Mackay Shields CLO-1 DAC transaction.

The pricing, which was tight to other euro-denominated CLOs priced in the recent past, extended to the other tranches. The €35 million of class B senior secured floating-rate notes priced at Euribor plus 180 bps; the €21 million of class C secured deferrable floating-rate notes priced at Euribor plus 260 bps; the €24.5 million of class D secured deferrable floating-rate notes priced at Euribor plus 410 bps; the €17.5 million of class E secured deferrable floating-rate notes priced at Euribor plus 655 bps; the €9.5 million of class F secured deferrable floating-rate notes priced at Euribor plus 906 bps and €34.3 million of subordinated notes was priced.

The notes are backed primarily by euro-denominated senior secured loans and bonds.

No other new issues were heard to have priced on Friday.

In other news, Carlyle Global Market Strategies Euro CLO 2015-1 DAC plans to potentially redeem by way of refinancing all classes of its rated notes due 2029, according to a notice.

The affected notes include €273.5 million of class A-1A floating-rate notes; €5 million of class A-1B fixed-rate notes; €53.9 million of class A-2A floating-rate notes; and €12 million of class A-2B fixed-rate notes.

And BNPP AM Euro CLO 2017 BV said an ordinary resolution was passed by holders of more than 50% of its subordinated notes directing an optional redemption of five classes of the issuer’s rated notes due 2031, according to a notice.

Meanwhile, CLO market players continue to mull future investing strategies. And interest has been shown in index replication and factor-type strategies, according to a JPMorgan CLO research note published on Wednesday.

Investors are searching for alternative risk/reward instead of traditional CLO fundamental analysis, the team wrote. In particular, “clients are considering ways of trying to avoid what some termed as ‘herd mentality’ where, given the fairly limited number of distinct CLO debt classes it is sometimes easy for the market to chase a particular kind of tranche, transaction or manager style.”

The JPMorgan research team wrote that factor investing work and using momentum to partly select baskets and the refinement of automatic selection with traditional CLO concepts such as reinvestment periods, spread tiering and portfolio risk are gaining support among CLO investors.

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