TCW Asset Management Company LLC on Jan. 28 refinanced its TCW CLO 2019-1 CLO via an applicable margin reset, or AMR, through KopenTech. This is the second time this CLO has been refinanced through an AMR, having been the first ever to do so almost exactly a year ago.
More than $800 million of bids cleared through KopenTech’s platform, resulting in the auction being over 2.5x oversubscribed, and ultimately the cost of capital on the triple-A through single-A notes was reduced from L+127 to L+116.
More precisely, the $240 million triple-A tranche received $575 million of bids, with the margin reduced by 10 bps, to L+97. The $18 million triple-A tranche was most heavily oversubscribed, with bids up at $102 million, leading the coupon to be slashed by 24 bps, to L+138.
The $50 million double-A tranche received bids of $76 million and the coupon was cut 13 bps, to L+167, while the $22 million single-As received $88.5 million of bids, leading the coupon to be cut 16 bps, to L+189.
Market sources comment that it is rare for a CLO to be refinanced twice, adding that one of the benefits of an AMR is that it is a far cheaper method of refinancing, thus opening the door to multiple refinancings.
This is the third AMR auction hosted on the KopenTech platform, with the other being Seix Investment Advisors LLC that, on Jan. 14, successfully refinanced its Mountain View CLO XIV.
More are expected to follow. KopenTech has identified four more CLOs with the AMR feature that will be out of their non-call periods in 2021, namely in order of when they closed, Atlas Loan Fund VIII, Mountain View CLO 2017-2, Catamaran CLO 2014-1, and Columbia CLO 29.
AMRs are now embedded in approximately $5 billion in CLO AUM. Moreover, already there are 15 broker-dealers on the platform — 10 more than this time a year ago — and it is likely that in the coming months this list will be expanded further, perhaps to an increase of three times the amount of broker-dealers that were on the platform a year ago.