Prudential Financial’s Dryden collateralized loan obligation (CLO) vehicle has returned to the market to issue a $491 million deal that is similar in structure to the last Dryden deal launched earlier this month, although its pricing notched up on the class A portions.
The Dryden 104 CLO Ltd. is split into six tranches, comprising $163 million in AAA-rated class A-1 and $156 million in unrated class A-2 notes, with respective subordination of 37.7% and 34.90 and pricing of three-month Libor plus 210 basis points and three-month Libor plus 270 basis points, according to a July 19 S&P Global Ratings presale report. The report notes a $40 million subordinated portion.
That compares to the $497 million Dryden 108 CLO Ltd, launched earlier in July, that has a much larger ‘AAA’-rated class A-1 portion of $315 million and an unrated class ‘A-2’ piece of $10 million, according to Moody’s Investors service, which did not rate the other tranches. The class A pieces respectively hold subordination of 37.0% and 35.0%, and pricing of three-month SOFR plus 165 basis points, and three-month SOFR plus 205 basis points.
S&P says the Dryden 104 deal will be collateralized by at least 96% senior secured loans, cash and eligible investments, with at least 80% of borrowers based in the U.S. A maximum of 55% of loans can be covenant-lite.
In the Dryden 108 deal, at least 90% of loans must be first-lien, senior secured transactions, and no more than 60% can be cov-lite, S&P said.
Compared to other broadly syndicated, according to S&P, Dryden 104 has higher total leverage and lower subordination; a higher weighted average cost of debt; a lower weighted average spread; and a lower scenario default rate and weighted average recovery rate.
