Excess Spread — Switched on, feeding the beast, senior year


Market Wrap

Excess Spread — Switched on, feeding the beast, senior year

Owen Sanderson's avatar
  1. Owen Sanderson
11 min read

Switched on

The Kensington comeback has poked its head into public format, following a private marketing process for the bottom of the capital structure. 

The marketing process is almost like that of a CLO — spoken-for senior from the arranger, private distribution for the equity and junior (in this case the residuals, reserve fund note and class F and G), fill in the mezz in public. 

Barclays (arranger and of course sponsor) is going for the hitherto unloved post-Thanksgiving execution window, which, to be fair, doesn’t look too bad — credit markets are open, Crossover is tight, there’s a dovish pivot in the cold winter air and it represents probably the last time in the year to deploy cash in primary. The mezz placement looks to be going gangbusters (class C 6.8x done at the time of writing, and tightened to 265bps-275bps from 300bps area IPTs), so the end of year gamble looks to have paid off.

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