CDO pricing can't get much better. Last week, Carlyle Investment Management was able to bring its high yield loan- backed 7.85-year triple-As at 37 basis points over three-month Libor. Carlyle High Yield Partners VI, which was led by Wachovia Securities, had been in the pipeline since last fall, when guidance for the senior class was 48 over Libor. Talk was revised in recent weeks to the 37 area, and the deal made good (see triple-A pricing chart, p. 11).
One source called this the tightest CLO print since 1998.
The 10.83-year single-A tranche was sold at 120 over three-month Libor, well within revised guidance around the 120 range, in from the 160 range. The triple-B class, which had guidance drop from the 290 to 250 range, priced at 245 over three-month Libor.
A buyside source credited the impressive pricing to the issuer's solid reputation, something often said of well-placed CDOs.
Meanwhile, triple-A levels continue dropping on the structured-finance CDO front as well. Sandstone I, managed by HBK Investment Management, brought its 2.87-year triple-A at 35 basis points over Libor. The deal is mostly backed by residential MBS. Deutsche Bank Securities was lead underwriter.
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