The new-issue market for collateralized loan obligations (CLOs) is picking back up after a brief lull over the holidays, and it appears that investors are still demanding a premium from less experience mangers.
In the past two days, Standard & Poor’s has published presale reports on three deals, which in CLO land is typically an indication that a deal has priced or that pricing is imminent. Two are from relative newcomers (or relative newcomers) Carson Capital and MidOcean Credit Partners, the other from long-time CLO manager Black Diamond Capital Management.
Carlson Capital is making its debut with the $324.5 million Cathedral Lake CLO 2013. The deal will issue two classes of securities with preliminary AAA’ ratings from S&P: one was marketed with a spread of three-month Libor plus 155 basis points and one at a fixed interest rate of 3.624%, according to S&P's presale report. Goldman Sachs is the arranger for the deal, which is expected to close Jan. 10. Carson Capital is an alternative asset manager based in Dallas, TX. It has $7.5 billion under management, according to S&P.
MidOcean Credit Partners, an affiliate of private equity firm MidOcean Partners, is marketing its second deal, (or at least its second S&P rated deal), the $372 million MidOcean Credit CLO II. The senior, $250 million AAA’-rated tranche is also being marketed at Libor plus 155 basis points. Jefferies is the arranger for the deal, which is expected to close on Jan. 29.
The third deal is from industry veteran Black Diamond Capital Management, which has 10 other CLOs under management. Its latest, the $370.8 million Black Diamond CLO 2013-1, is being arranged by Natixis and is expected to close on Feb. 6, according to S&P. The deal has a $246.9 million, AAA’-rated tranche that was marketed at Libor plus 145 basis points, in line with recent spreads on deals from experienced managers. Black Diamond manages a total of $4 billion in S&P-rated CLOs.