Deal Scan: Palmer Square CLO Refi Puts AAA at Double-Digit Spread
New Low for CLO AAA: Palmer Square Capital Management CLO refinanced a $322.1 million collateralized loan obligation, reducing the spreads on the senior, triple-A rated notes to 97 basis points, according to a presale report published by S&P Global Ratings. That marks the second deal this year to cut the discount margin rate inside of 100 basis points.
The AAA-rated notes of the Palmer Square 2013-1 transaction originally had a coupon of 125 basis points over Libor, according to S&P.
The new spread was tighter than the previous low of 99 basis points over Libor for the Sound Point CLO III refinancing that priced on April 7.
Presale reports were also issued Wednesday for the $410.25 million OZLM XVI (Fitch Ratings and S&P); the $285.8 million Northwood Capital XV (also Fitch and S&P); the $1 billion Oaktree EIF II Series A2, A,B and C replacement notes (S&P); and the $539.4 million Golub Capital Partners CLO 19 (B)-R transaction (Fitch).
S&P is also rating the replacement notes for PGIM's Dryden 35 Europe CLO 2014, a €796.3 million transaction. The new rate on the A paper is 95 basis points above the six-month negative-interest Euribor rate.
According to Thomson Reuters LPC, 154 deals have refinanced or reset this year through the end of April.
The Northwood report came a day after S&P issued reports on two other new-issue deals for the month: Parallel 2017-1 and Voya CLO 2017-2. Also on Tuesday, two deals priced according to JPMorgan: Octagon Investment Partners XIV (totaling $674 million) and Aqueduct Euro CLO 1-2017 (€411 million), both through Citigroup.
Month-to-date, 11 U.S. CLOs have priced with a volume of $4.9 billion, including $2.1 billion in refinanced/reset deals.
Whole Business Securitization: A new $440 million Five Guys Funding LLC securitization is being rated by Kroll Bond Rating Agency. The 1,437-location Five Guys chain is pooling receivables from franchise agreements, royalties, intellectual property/licensing agreements as well as restaurant and bakery sales from company-owned stores. KBRA has assigned triple-B ratings to both $400 million in Class B notes and $40 million in Class A-1 notes. It follows two other whole-business ABS deals this year: FOCUS Brands Funding Series 2017-1 and TGIF Funding Series 2017-1, which carry similar BBB ratings.
ABS-15G Alerts: Two due-diligence auditing notices were filed Wednesday with the Securities and Exchange Commission. Goldman Sachs is prepping a new CMBS in GS Mortgage Securities Trust 2017-GS6; meanwhile, LRF 2017-1 is a small/mid-ticket equipment funding securitization by LEAF Capital Funding (the fifth such deal this year).