PennantPark closes $300m CLO

The manager’s fifth such mid-market vehicle carries a coupon of three-month SOFR plus 2.7% for its highest debt tranche.

PennantPark Investment Advisers has closed a $298.7 million mid-market collateralised debt obligation, Private Debt Investor has learned. The firm is expected to announce the closing later today.

The CLO, the manager’s fifth such instrument since 2019, has a two-and-a-half-year reinvestment period and an 11-year final maturity.

According to a schedule viewed by PDI, the vehicle includes $40 million of A-1A notes (which are expected to be rated triple-A by S&P) with a coupon of three-month SOFR plus 2.7 percent. The CLO’s $18 million of E notes carry a coupon of three-month SOFR plus 8 percent.

“This transaction demonstrates PennantPark’s commitment to our CLO platform and our ability to access attractive, long-term financing, even in this challenging market,” said Arthur Penn, chief executive officer of PennantPark, in a statement. “We are particularly pleased in our ability to expand the strong capital position of our platform in order to be able to invest in today’s attractive vintage of both primary and secondary opportunities.”

After a record-breaking pace of primary issuance in 2021, primary issuance of CLOs has slowed in recent months.

The reinvestment period for the term debt securitization ends in April 2025 and the debt is scheduled to mature in October 2033. Credit Suisse Securities (USA) LLC acted as lead placement agent on the CLO Transaction, and KeyBanc Capital Markets, Inc acted as co-structuring agent.

PennantPark, based in Miami, is a mid-market credit manager with approximately $6 billion of investable capital, including potential leverage.