RRE 18 Reset Pricing Versus Recent Market Norms
RRE 18’s headline AAA tranche priced tightly at 123 bps. Even so, at this level it continues to offer reasonable value relative to other recent reset transactions.
RRE 18’s headline AAA tranche priced tightly at 123 bps. Even so, at this level it continues to offer reasonable value relative to other recent reset transactions.
To the satisfaction of AAA investors, the reset of RRE 1 Loan Management CLO proved accretive, as they were repaid at par on the reset date rather than waiting for quarterly prepayments, which would ordinarily have taken many quarters to return the full principal. The deal was originally priced in 2019 and was later refinanced, closing on 15 April 2021, with the AAA tranche printing at just 82 bps.
EU CLO managers such as KKR, Partners Group, Alcentra, RRAM, Whitestar, Oaktree, Anchorage, and Five Arrows have performed well in resetting their outstanding deals.
Although Redding Ridge’s interest return alpha metrics have been below average, it has outperformed its peers since August 2023 by a good margin thanks to its impressive MV return alpha outperformance. As illustrated in the graphs below, this demonstrates the success of its proactive portfolio management style.
If these deals are liquidated, UBS AM and Redding Ridge stand to earn incentive fees in the healthy current loan market.
The recent pricing of RRE 24 has established a new benchmark for the AAA-BB pricing differential. In today’s higher interest...
