Based on a review of about 700 U.S. CLOs rated by S&P, the average exposure to energy companies is only about 3.3%; thats a much lower concentration than these companies have in overall junk bond and leveraged loan markets, at 17%.
Regardless of whether a missed interest payment on second lien notes is made, the rating agency "believes that a default of some sort is inevitable."
Corporate high-yield investors withdrew $1.89 billion from bond funds this week, driven by worries over energy-based issues as crude oil prices continued their plunge. Bank loan mutual funds and ETFs, meanwhile had a 22nd consecutive week of net outflows with $1.05 billion withdrawn.
Disposable medical equipment provider Sage Products came to final terms on a $380 million loan package which featured a price flex and the addition of a future step-down for the first-lien portion of the add-on facilities.
Octagon Credit Investors took advantage of a dip in loan prices over the summer to quickly print a CLO at the request of one of its own investors, using the proceeds to snap up collateral, largely in the secondary market.
Automotive products manufacturer Tenneco Inc. on Tuesday sold $225 million notes in a drive-by offering, according to KDP Investment Advisors.
Westmoreland Coal, of Englewood, Colo., went to market Tuesday with a $400 million, seven-year bond offering to finance a tender offer for existing notes. HUB International of Chicago planned a $280 million drive-by notes offering through Morgan Stanley to fund acquisitions announced this week.
Agricultural processing firm CPM Holdings is heading to the loan market seeking to place $440 million in new secured credit facilities to refinance existing debt and fund a sponsor dividend, according to ratings agency reports.
The 10-year, 6.125% notes priced at par, the company announced Monday, hours after it announced it was planning to place the notes as well as a 150 million loan to pay for its acquisition of the European pet foods division of Procter & Gamble.
Spectrum Brands, a diverse consumer brands portfolio majority owned by The Harbinger Group, announced Monday it was offering $250 million in a drive-by notes offering and a 150 million loan for a planned acquisition and for general corporate purposes.
Firm: Octagon Credit Investors