Several CLOs backed by public-private partnerships (PPP) and project finance loans (PFL) have recently hit the European market. More are anticipated this year as issuers look for regulatory capital relief and managers scour the market for higher-yielding assets that also offer the cushion of diversity from such widely referenced sectors as residential real estate and corporate debt.
A sequel to the Stichting Profile Securitization I deal, which came to market last December, is slated for this year, according to one of its arrangers, Sumitomo Mitsui Banking Corp. Europe. The most recent such deal (itself the second in a series), EPIC CLO II, came to the market in early July. The 900 million ($1.2 billion) arbitrage cash flow deal is backed by a portfolio of PPP and PFL loans, along with a bucket of synthetic collateral. Merrill Lynch arranged the deal to the market and DEPFA Bank is the manager; KfW Bankengruppe intermediated. The A-plus tranche of the deal priced at 38 basis points over three-month Euribor.