UBS has priced the notes for Prudential Capital Group's $349 million Dryden 4 collateralized loan obligation. The triple-A notes priced at LIBOR plus 54 basis points and the triple-B tranche priced at LIBOR plus 285 basis points, according to a source. The deal was initially slated to be $300 million.
Dryden 4 is the first CLO that UBS has worked on since bringing on board Mike Rosenberg and Jeff Herlyn as co-heads of the global credit CDO group from J.P. Morgan in March. Herlyn was on vacation and Rosenberg did not return calls. Ross Smead, portfolio manager for Prudential's leveraged bank loan division, declined to comment on the deal.
A shortage of new issue in the loan market and a heavy influx of bonds to pay down bank debt has left many CLOs long on cash and has resulted in lower spreads on deals. But according to one CDO analyst, the arbitrage in CLOs is very compelling, especially compared to alternative asset classes and the arbitrage of previous years in the leveraged loan markets (LMW, 6/1).