Bank of America Merrill Lynch expects to upsize a new CLO to be managed by LCM Asset Management, making it the largest fund to launch so far this year, according to sources.
The bank is boosting the CLO to $650 million to $700 million, up from an initial plan for $410 million, which is right around the size of the majority of this year’s new funds.
Moreover, price talk on the triple-A tranche is trending to a discounted margin of Libor plus 120, tighter than the Libor plus 125 on the two most recent CLOs to price, from ING Alternative Asset Management and Symphony Asset Management.
The CLO market has recently begun to rev up. So far this year, a total of $4.2 billion has been issued, according to JPMorgan. And sources say as many as five to seven deals are in the hopper. Visible funds include the $500 million Avalon IV Capital Ltd. from and Invesco and Nomura Securities, and the $410 million ALM IV from Apollo Credit Management and Morgan Stanley.