Article
CLO Pipeline Pulse: Managers Pull Deals Forward Amid Strengthening Market Demand
Reporting: Victoria Thiele, Sid Punjabi
The CLO pipeline grew even busier over the past week as investors gained confidence about a deal between the United States and Iran and as the Global ABS conference in Barcelona moves closer. See the CLO Pipeline Pulse for a list of deals that are expected to price in the coming weeks.
A steady pace of issuance is gaining traction in the United States, where price talk has emerged for a number of live deals, many of which are pricing earlier than expected.
Sona is looking to bring its second new issue deal this week after initially targeting a pricing date in June, according to sources. The firm has placed the triple-A notes at SOFR+125 bps, matching the level at which Abry Partners priced earlier this week. Sona’s deal was upsized to $500 million.
In similar territory, Brigade is looking to price its new issue deal Battalion CLO XXXII’s triple-As at 124 bps, with some bonds still available, according to sources. BNP Paribas is arranging both Sona’s and Brigade’s CLOs.
Barings is looking to price its second infrastructure deal in the next week, and sources say the triple-As are subject at 135 bps.
Meanwhile, private credit CLOs are seeing a steady pace of mandates, with Fidelity, Partners Group and Carlyle all lining up new issue transactions.
Anthelion’s third new issue CLO, Anthelion CLO 3, and a reset of UBS Asset Management’s Madison Park 67 have emerged via arranger JPMorgan.
In Europe, Octus is aware of approximately 20 deals being marketed that have ambitions to price before Global ABS in the second week of June.
Some of the strong supply is managers working through their backlog after two months of low issuance, but deal flow is likely to remain high as investors grow more optimistic about a resolution of the conflict in Iran, a banker told Octus.
Triple-A spreads have plateaued at around 126 bps over Euribor in the past three weeks, which remains the tightest guidance in the pipeline visible to Octus.
“There are nuances between resets and new issues and between managers, and spreads never move in a straight line, but the overall direction goes towards tightening,” the banker said.
If news out of the Middle East remains encouraging, a bullish mood during the Barcelona conference, characterized by the intense “speed-dating” schedules for managers and investors, could have a meaningful impact on issuance volumes and spread tightening.
On the asset side, a new repricing wave is increasing pressure on the arbitrage for managers. Borrowers including Stada, Colosseum Dental, IFCO, Unica and Natra are aiming to cut their margins by 25 to 50 bps, affecting more than €4 billion of European CLO holdings.
“In March, I was buying a lot below par,” a CLO manager with an open warehouse told Octus. “Now primary deals are pricing at 275 bps and the secondary market is back to par. What am I to buy?”
The Octus Pipeline Pulse provides an overview of deals that have been mandated or are in premarketing phases with different arrangers to give subscribers greater visibility into upcoming opportunities. This tracker is updated weekly with new deals that have been sourced throughout the market.
Contact us for suggestions on how to improve this tool and to suggest any deals not yet tracked.
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