European CLO Mezzanine Guidance Widens Amid Issuance Onslaught  

Some arrangers of European CLOs in marketing have widened price guidance on mezzanine tranches for the deals since the end of last week, according to sources.

Octus, formerly Reorg, has seen updated guidance for new issues by Guggenheim and HPS, as well as a reset by Oaktree, showing a widening of spreads across tranches.
 

Triple-A guidance has remained stable. Jefferies narrowed price talk for the senior notes of Guggenheim from the low-to-mid-130s to Euribor+132 bps, and Natixis kept guidance for HPS’ triple-As at 131 bps-132 bps, among the tightest in the market.

Secondary market prices also remained unchanged over the past week apart from a slight widening in double-As and double-Bs, according to P&G Alternative Investments.

In contrast, broader credit markets tightened last week as concerns about geopolitical risk and tariffs eased. The Crossover index closed at 284 on June 27, 20 points tighter than the previous week.

Several bankers said that if CLO mezzanine spreads are weakening, it is due to the intense issuance.

“No bond is easy to place, especially when you have this much supply,” a banker said.

Octus is aware of about 25 European CLOs, including resets and refinancings, expected to price in the coming weeks, a relatively busy pipeline.

Spread movements in the CLO market have been driven largely by technical factors of supply and demand in the past two months since issuance resumed after a pause amid the April volatility.