06/29/2012

CLO Issuers Flowing Back Into Pipeline

A recent slowdown in the production of collateralized loan obligations was short-lived.

Following a dip in deal volume in late May and early June, the issuance pipeline has swollen to at least eight transactions in various stages of development. The expected issuers include Blackstone and some other familiar names, along with several managers preparing their first offerings since the credit crisis and at least one newcomer, Neuberger Berman.

Only a month ago, renewed concerns about Europeís debt crisis appeared to be suppressing investor appetite for CLOs, slowing what had been a busy issuance calendar during the first five months of the year. The word was that several issuers, including Apollo Global and BlueMountain Capital, had put planned offerings on hold. But both of those transactions have since priced, and investors once again appear to be eager to get in on new offerings.

Among issuers with deals in the pipeline, Blackstoneís GSO Capital unit appears to be the furthest along with its offering, dubbed Gramercy Park CLO. The deal, which weighs in around $500 million, hit the market in the past couple of weeks with Citigroup running the books. It is the firmí first CLO since August 2011, when it priced a $369 million deal, also via Citi.

Meanwhile, American Capital Strategies, Halcyon Structured Asset Management and McDonnell Investment are attempting their first offerings in at least four years. American Capital last priced a deal in 2007, when it sold a $500 million CLO via Citi. This time around, Deutsche Bank is running the books on the firmís yet-to-be named offering. Deutsche also is managing an unnamed CLO from McDonnell, as it did for the firmís last offering ó a $400 million transaction that priced in 2007. Halcyon hasnít been in the market since 2008, when it sold a $707.6 million deal via Merrill Lynch. Its forthcoming deal, of undetermined size, will come through Citi.

Other issuers with deals on tap include CIFC Capital, Shenkman Capital and Symphony Asset Management. CIFCís offering would be the first of two the firm is expected to produce this year. Its last deal, weighing in at $415.2 million, priced in December via Citi. RBS is running the books this time around. Symphonyís last CLO was a $623.8 million transaction that priced April 19 via Bank of America, while Shenkman is planning a sequel to a $311.6 million deal it sold on June 13 via BofA.

UBS is running the books on Neuberger Bermanís debut offering, whose size and exact timing have yet to be determined.

CLO issuers in the U.S. are on track to have their most productive year since 2007. Since Jan. 1, $16.3 billion of CLO paper has been sold, compared to just $5 billion for the same period last year, according to Asset-Backed Alertís ABS Database.

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