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Debut 2018 CLOs from CBAM, Apex have unusual capital structures

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CBAM and Apex Credit Partners are both issuing their first CLOs of the year, and both have an unusual capital structure that appears to cater to investors in the senior tranches of notes to be issued.

The senior, triple-A-rated tranche of the $1 billion CBAM 2018-5 can be called, or redeemed after just 1.55 years. It benefits from 36% credit enhancement, and was priced at Libor plus 102 basis points, according to presale reports from Fitch Ratings and Morningstar Credit Ratings.

The the other six classes of notes to be issued are non-callable for 2.05 years.

The capital stack also includes a $74.8 million tranche of residual notes that are unrated.

The deal has a reinvestment period of approximately five years, a nine-year weighted average life and an “all-in” weighted average spread of 3.52%.

CBAM 2018-5 is the fifth overall collateralized loan obligation for the insurer-backed manager, which was the leading 2017 issuer by volume.
The $462.5 million Apex CLO 2018 is half the size of CBAM's deal; but it also has an unusual capital structure. Three tranches of triple-A-rated notes will be issued, each paying a different spread over Libor. Together, they account for 63.2% of the deal’s capital stack. The Class A-1A tranche of notes, sized at $235 million, benefits from a higher-than-usual 40.2% subordination and is expected to pay 101 basis points over Libor, according to Moody’s Investors Service.

The $20.5 million Class A-1B notes pay 121 basis points over Libor and the $37 million in Class A-2 notes pay 103 basis points over Libor.

Apex’s previous deal, CLO 2017-II, which priced last August, had a fairly typical structure with two senior tranches: a Class X interest-only tranche and Class A term notes.

That followed a $403 million January 2017 issuance under Apex’s former JFIN shelf (JFIN CLO 2017) in which the manager split the triple-A paper between a $225 million Class A-1 notes tranche and a 3.7% fixed-rate class of A-F notes.

The new Apex deal will build on to Apex’ $4.4 billion portfolio of 10 CLOs under management. Apex is jointly owned by Jefferies (a unit of Leucadia National Corp.) and MassMutual.

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CLOs CDOs Fitch Moody's Morningstar S&P