Partners Group (UK) Management Ltd., an infrequent CLO issuer, is sponsoring its first new Euro collateralized loan obligation in two years, according to a presale report from Moody’s Investors Service.
Penta CLO 3 is a €413 million transaction being managed by Partners, an indirect subsidiary of Partners Group Holdings AG, a global asset management firm based in Switzerland that oversees more than €57 billion in private debt and equity, infrastructure and real estate assets.
Partners’ previous transaction, Penta CLO 2 B.V., was a transaction that closed in June 2015 and was refinanced in August. The company also still manages a 2007-vintage CLO, Penta CLO 1 S.A., which last November Moody's estimated still had about €47.1 million in outstanding notes from its senior A-1 tranche.
According to Moody’s, the €236.5 million Class A notes in the new deal (which is set to close in November) is expected to have a coupon of negative Euribor plus 85 basis points. While the manager has only acquired 35% of the portfolio’s assets prior to the presale publication, Moody’s stated Partners has identified about 85% of the assets for the deal’s par target size.
The deal comes with a standard two-year non-call and four-year reinvestment period. It’s base-case weighted average life is 8.5 years, slightly above that of recent peer-issued deals with eight-year WAL figures. The weighted average rating factor as measured by Moody’s — which measures the balance between higher- and lower-rated speculative-grade debt in the portfolio — is in line with recent Euro deals from CVC Credit Partners and HPS Investment Partners.
The collateral will include senior-secured loans and high-yield bonds, second-lien loans and a maximum 30% cov-lite loan concentration, much of which will be focused in the healthcare/pharmaceuticals and high-tech industry sectors.
The capital structure will include nonvoting votes (exchangeable and otherwise) that will lack any voting rights toward manager removal or replacement. These are notes eligible for purchase by U.S.-based regulated institutions that are forbidden to otherwise invest in Euro CLOs with bond buckets because of domestic Volcker Rule restrictions.