PineBridge taps market; TPG readies firm’s second CLO deal; secondary volume down

By Cristal Cody

Tupelo, Miss., July 14 – PineBridge Investments LLC priced $465.9 million of notes in the Galaxy XVIII CLO Ltd./Galaxy XVIII CLO LLC transaction, a market source said on Monday.

PineBridge placed the CLO AAA-rated floating-rate notes at Libor plus 147 basis points.

Goldman Sachs & Co. arranged the transaction.

The deal is the New York City-based asset management firm’s second CLO transaction of the year.

TPG Global, LLC also plans to bring its second CLO transaction. The Fort Worth, Texas-based firm intends to offer $527.33 million of notes in the TICP CLO II, Ltd./TICP CLO II, LLC deal via Citigroup Global Markets Inc., a market source said.

About $10 billion of CLO transactions are in the pipeline, according to a market source.

Appleby Global Group Services Ltd. said in a CLO report released on Monday that it expects issuance for the remainder of the year to be robust.

“It will be interesting to see if there is any tail off over the summer period, but certainly Appleby’s pipeline is well fueled through to the end of 2014 and beyond,” according to the report from the London-based offshore legal services provider. “If the current rate continues for the next six-month period, there would be $126 billion issued across the full year.”

More than $70 billion of U.S. and European CLOs have priced year to date, according to data compiled by Prospect News.

Monthly primary volume figures for each of the past four months were higher than any month since the financial crisis, according to a Wells Fargo Securities, LLC report.

“We believe that the large primary calendar makes pronounced spread tightening difficult, especially in the mezzanine space,” Wells Fargo Securities senior analyst Dave Preston and associate analyst Jason McNeilis said in the note.

U.S. CLO AAA notes are on average 1 bp tighter from a month ago at Libor plus 147 bps, the analysts said.

U.S. CLO BB-rated notes are trading flat on the month at Libor plus 625 bps.

European AAA CLO spreads are tight, according to the analysts.

Euro CLO AAAs are currently trading at Euribor plus 138 bps, about 2 bps tighter on the month, the analysts said.

Euro CLO BB notes are trading 15 bps wider from a month ago at 565 bps plus Euribor, according to the note.

Secondary volume is down “as the summer doldrums began to take hold,” the analysts said. “In general, the same themes still dominate the secondary market: CLO equity is in high demand, secondary spreads lag somewhat due to a large primary calendar, and mezzanine spreads are soft due to elevated supply.”

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