Redding Ridge prices €394 million CLO; primary AAAs firm; high-grade secondary volume up

By Cristal Cody

Tupelo, Miss., Oct. 2 – The European primary market remains active with a new CLO offering from Redding Ridge Asset Management (UK) LLP.

Redding Ridge Asset Management (UK) priced €394 million of notes in the manager’s third euro-denominated broadly syndicated CLO deal of 2020.

Deal volume was the strongest in September in the dollar space as some CLOs showed “characteristics of pre-coronavirus deals,” according to a Fitch Ratings report on Friday. “September saw CLOs price with five-year reinvestment periods for the first time since March, and spreads had a tightening bias.”

The average reinvestment period increased to 3.4 years in September from two- to three-year periods seen since mid-March due to the Covid-19 pandemic, Fitch said.

CLO AAA tranches structured with a one-year non-call period and a three-year reinvestment period have priced between Libor plus 125 basis points and Libor plus 140 bps in September versus Libor plus 165 bps to 175 bps in June, Fitch said.

Dollar-denominated CLO AAA through BB primary spreads tightened 15 bps to 50 bps in September, the Wells Fargo analysts said.

In the secondary market, CLO AAA and AA tranches firmed 2 bps to 5 bps month over month, while A-rated tranches and BBB issues widened 5 bps to 15 bps, according to the Wells Fargo note.

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