ICM Markets Year's First New-Issue Euro CLO
Intermediate Capital Managers broke the ice on new CLO deals in Europe this week as it priced a new €400 million portfolio of broadly syndicated loans.
The new St. Paul’s CLO VII caps a week in which the dam burst on new issuance for U.S. collateralized loan obligations as well.
St. Paul’s CLO VII is the 10th CLO transaction for ICM. ICM parent firm Intermediate Capital Group oversees a total of 13 European and 6 U.S. CLOs that involves a combined €10 billion in senior secured loan and high-yield bond investments.
The St. Paul transaction is being marketed despite only 30% of the portfolio being acquired, but Intermediate says it has identified an additional 43% of assets – giving the St. Paul’s deal an identified portfolio of €289.3 million of its target par amount, according to a presale report from Moody’s Investors Service.
The triple-A paper in the transaction, the Series ‘A’ notes, have been divided into floating- and fixed-rate tranches. The ‘A-1’ notes totaling €229.4 million have a coupon of three-month Euribor plus 95 basis points, while the €10.6 million in ‘A-2’ notes have a rate of 1.17%.
The three-month Euribor carried a negative interest rate of (-)0.328% at the close of markets on Wednesday.
To date, five European CLOs have been marketed totaling €1.8 billion in volume, with the four others involving refinancing of certain notes in vintage 2013-2014 deals: Carlyle Group’s Global Market Strategies CLO 2014-2; Harvest CLO VIII (3i Debt Management); Alcentra’s Jubilee CLO 2013-X and Dryden 32 Euro CLO 2014, which was priced this week by PGIM.
For Dryden 32, PGIM priced against the six-month Euribor (-0.244 as of Wednesday) and tightened the rate on the replacement Class A-1A notes (€199.25 million) to just 93 basis points over the bench mark vs. the original 140 basis point spread.
During the July 2014 release of Dryden 32’s release, Euribor was at 0.051% (July 1).