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MidOcean refi of 2014-vintage CLO splits senior class into six tranches

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MidOcean Credit Fund Management is extending and refinancing a 2014-vintage collateralized loan obligation with a completely revamped senior-note stack.

The refinancing and extension of the slightly upsized $524.8 million MidOcean Credit CLO III will divide an original $312 million triple-A-rated notes tranche into six classes of varying coupons, involving a mix of floating- and fixed-rate securities, according to a presale report published by S&P Global Ratings. (The deal will also include a newly introduced series of Class X interest-only notes, sized at $8 million.)

The new capital stack includes $208 million in Class A1-R notes with an assumed price of Libor plus 112 basis points, according to S&P. That narrows from the 146-basis-point spread of the deal's original AAA class notes.

MidOcean is issuing three other AAA-rated classes with floating rates: the $25 million Class A3A1 tranche (Libor plus 105 basis points), $24 million in Class A3A2 notes (priced at 97 basis points above Libor); and the $8 million in Class A3B1 notes paying at Libor plus 140 basis points.

Mixed into the stack are the 4.09% fixed-rate Class A2-$ notes ($30 million) and the 4.38% Class A3B2 tranche ($10 million).

The report did not present any of the issuer's reasons for splitting the $305 million in multiple AAA tranches (which includes a new $8 million interest-only Class X class priced at 63 basis points over Libor). Managers with multiple senior notes oftentimes issue them with different tenors to cater to investor requests.

The original $518 million transaction is slated to exit its reinvestment period in July.

The reinvestment period is being extended to April 2023, and the noncall period to April 2020. The weighted average life test was also extended, to April 2027.

Also being refinanced are five subordinate classes of notes totaling $164.2 million.

MidOcean Credit Fund Management, which issued a new deal in January, has refinanced two other CLOs since the fourth quarter of 2017.

The firm has approximately $7.4 billion in assets under management, according to S&P.

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