CIFC to Liquidate 2017 CLO That Holds Loans With FCF Significantly Above Market Average

Reporting: Sicheng Wan

CIFC Asset Management is planning to redeem its CIFC Funding 2017-II CLO via liquidation on June 9, according to regulatory filings.

CIFC is expected to redeem all the tranches from the $146.4 million triple-A to the $26.4 million double-B at par. Deutsche Bank is the trustee of the CLO.

The $587.5 million CIFC Funding 2017-II was priced via Morgan Stanley on March 28, 2017, and closed on May 9 that year. The CLO had a two-year noncall period that ended April 20, 2019, and a five-year reinvestment period ended April 20, 2022.

According to Octus’, formerly Reorg’s, Portfolio Analytics platform, the leveraged loans in CIFC Funding 2017-II’s portfolio have an average free cash flow yield of 3.27%, well above the U.S. CLO market average of 2.57%. Meanwhile, CIFC Funding 2017-II’s first lien net leverage of 3.72x is below the U.S. market average of 4.14x.

Additional stats on CIFC Funding 2017-II, CIFC’s total U.S. CLO holdings and a comparison with the market average are shown in the table below:

CIFC Funding 2017-II’s first lien net leverage ran above the U.S. market average until the first quarter of 2024. The CLO’s FCF yield has run below the U.S. market average since the beginning of 2020, except for one reporting date during the fourth quarter of 2021. See the charts below:

CIFC has priced five new CLOs so far this year, including four deals in the United States and one in Europe. Its latest CIFC 2025-III priced via Barclays on April 15. The manager has also priced two resets and three refinancings in 2025.