Over the past two days, nine additional deals that originally were issued between 2013 and 2015 have been repriced or refinanced, some for the second time, according to S&P Global Ratings presale reports and research published by JPMorgan.
The $4.7 billion sum brings the total volume of CLO refinancings for the month to date to $11.3 billion, as managers continue to take advantage of the repeal of skin-in-the-game rule for this asset class to make changes to deals without triggering a requirement to hold 5% of the economic risk of deals.
April’s tally already tops the monthly activity for both February and March, and puts the market on pace to match the frenzy in the spring of 2017. That refinancing wave was driven by another, related trend: Managers were taking advantage of a one-time opportunity to reprice CLOs grandfathered from risk retention without triggering compliance.
Between February and April of last year, more than $72 billion of CLOS were refinanced. The busiest month was March 2017, when a post-crisis record of $23.7 billion were refinanced.
According to JPMorgan, the six deals repricing Wednesday were the $412 million NewStar Fairfield Fund CLO (formerly Fifth Street SLF II) via Natixis; Och-Ziff CLO Management’s $573 million OZLM VI through arranger Bank of America Merrill Lynch; Angelo, Gordon & Co.’s Northwoods Capital XI-B, sized at $603 million, through Credit Suisse; the $369 million B&M CLO 2014-1 managed by Tortoise Credit Strategies, via Citigroup; Credit Suisse Asset Management’s Madison Park Funding XIII, a $742 million portfolio, arranged by MUFG Securities; and FC BSL Management’s $561 million Fortress Credit BSL III, also through arranger MUFG.
Both Northwoods XI-B and OZLM VI were deals that were previously refinanced in early 2017 as part of the wave of eligible CLOs that could undertake the one-time refinancing allowed by federal regulators under a “no action” guidance letter from the Securities and Exchange Commission.
Presale reports indicate that repriced deals closing soon include PGIM’s Dryden XXVI Senior Loan Fund, a deal originally issued in March 2013; the Romark WM-R $515.7 million senior loan portfolio that was originally issued as Washington Mill CLO in May 2014, and CVC Credit Partners’ $530 million, 2013-vintage Apidos CLO XV transaction.
Dryden XXVI, expected to close on Monday, will be priced at a new AAA spread of 90 basis points, while Romark is narrowing its AAA coupon to 103 basis points over Libor. And Apidos – which was another deal previously refinanced in March 2017 – will have a new AAA tranche price of 101 basis points over Libor.
Romark, which managed nine CLOs with $3.4 billion in total CLO assets under management, will have a new two-year noncall period in force through April 2020 as well as a reinvestment period through April 2023.
