CLO NEWSLETTER Trends
Cov-relief, A-to-E activity remain slow in hot April loan market May 02, 2013; Source: LeveragedLoan.com; By : Steve Miller
Amendment activity was lackluster again in April. With liquidity running hot in the institutional market, amend-to-extend activity was limited to pro rata loans. Covenant-relief activity, meanwhile, remained slow. In all, four issuers loosened tests on $2.8 billion of leveraged loans, versus $5.8 billion in March. This chart is part of an LCD News analysis available to subscribers. Other charts in that analysis: • Amend-to-extend volume • 2014 maturity wall For more: Click here CLO Issuance Slides To $4B In April After Booming March May 02, 2013; Source: LeveragedLoan.com After a busy month of March, CLO issuance in the U.S. slowed noticeably in April, to just $4 billion via nine deals. The April CLO activity brings year-todate volume in the sector to $30.1 billion. While that’s a healthy $7.5 billion monthly average, the pace of collateralized loan obligation vehicles has dropped off. In March there was nearly $11 billion in issuance via 22 deals. For more: Click here Leveraged loans return 0.6% in April as rally persists; YTD return is 2.72% May 01, 2013; Source: LeveragedLoan.com; By : Steve Miller The loan market’s 2013 rally persisted in April. Fueled by another month of muscular technical conditions and positive investor sentiment, the S&P/LSTA Index returned 0.6%, versus 0.82% in March. The larger names that constitute the S&P/LSTA Loan 100 lagged slightly in April, with a 0.56% return, after marginally outperforming in March, at 0.84%. For more: Click here
Leveraged loan default rate eases in April after hitting recent high May 01, 2013; Source: LeveragedLoan.com; By : Steve Miller After pushing to its highest level since November 2010 in March, the loan default rate receded in April. Indeed, the S&P/LSTA Index suffered just one default during the month, when Synagro Technologies filed for Chapter 11. As a result, the loan default rate retreated to 1.91% by principal amount, from 2.21% in March, when three directory issuers defaulted on $4 billion of loans. For more: Click here
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Europe CLOs Give Better Value on High-Rated Notes, Barclays Says Apr 26, 2013; Source: Bloomberg; By: Patricia Kuo The higher-rated portions of European collateralized loan obligations are offering better value than U.S. deals as the terms and structures provide sufficient compensation for risk, according to Barclays Plc. (BARC) The AAA ranked pieces of the three European transactions completed this year pay investors between 130 basis points and 140 basis points more than the euro interbank offered rate, compared with an average of 120 basis points for U.S. deals, according to the report. A basis point is 0.01 percentage point. For more: Click here Loan mutual funds, ETFs see 45th straight week of inflows Apr 25, 2013; Source: LeveragedLoan.com; By: Mart Fuller Retail-cash inflows into bank loan mutual funds and exchange-traded funds totaled $1.11 billion for the week ended April 24, according to Lipper FMI. That’s an expansion from $790 million last week and it’s the 45th positive reading for a huge inflow streak totaling $24.5 billion. ETFs accounted for about a third of the inflow, at $354 million. That is the largest measurement of ETF inflow against mutual fund inflow this year, and, in fact, the largest such reading since the week ended Oct. 31, which showed also 32% of the flow. The four-week trailing average dips to $936 million, from $973 million last week and $1.16 billion the week prior. For more: Click here Asset sourcing, risk retention key for Euro CLOs Apr 25, 2013; Source: SCI The ability to source loans and retain risk will be key for CLO managers launching new European CLOs, Fitch says. The cost of funding for European CLOs has reduced to a point where CLO economics are once again starting to look viable for new issuance. At the same time, CLOs are becoming more appealing to credit investors searching for higher yielding, less interest rate sensitive credit asset classes. The re-opening of the European CLO market is positive news for CLO asset managers, whose long-term business viability is nevertheless less reliant on CLOs than in 2008, Fitch observes. In the absence of new CLO issuance, managers had no alternative but to diversify their loan management platform to different vehicles. The agency estimates that CLOs now represent one-third of the total assets under management of the top five CLO managers, versus two-thirds in 2008. For more: Click here Leveraged loan LIBOR floors sink as issuers’ market persists Apr 23, 2013; Source: LeveragedLoan.com Thanks to a combination of red-hot technicals – there is massive amounts of cash sitting in institutional investor coffers – and low interest rates, the average LIBOR floor on institutional loans eased further in April, to 1.09%, from 1.10% in March and from 1.25% at year-end. The current level is the lowest since the LIBOR floor feature came into widespread use, in the wake of the 2008-09 credit crunch. For more: Click here
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S&P: Europe’s middle market seeks new ways to fund growth Apr 23, 2013; Source: LeveragedLoan.com In a new report entitled “Europe’s Mid-Market Seeks New Ways To Fund Growth”, Standard & Poor’s comments that the development of a more cohesive alternative funding environment for mid-market companies in Europe is becoming more likely as banks continue to deleverage. The report notes that midsize enterprises are more often seeking to diversify their funding sources as banks – their traditional lenders – embark on a deleveraging process that may take many years. At the same time, investors searching for yield increasingly want to diversify their investments into this new asset class. However, despite some progress on linking together mid-market companies with willing capital, a cohesive pan-European solution is still elusive, S&P comments. For more: Click here Erroneous WARF computations corrected Apr 22, 2013; Source: SCI Moody's has finalised its review of all outstanding European CLO transactions for potential ratings impact relating to weighted average rating factor (WARF) differences resulting from the incorrect use of an alternative approach for computing WARF. The agency has identified 21 transactions that could have been impacted by the erroneous use of the alternative WARF computation. Under Moody's published global CLO rating methodology, it defines its WARF as the par-weighted average of the rating factors of each of the assets in the collateral pool and derives the default probability of the portfolio using this average WARF value in combination with the remaining life of the portfolio. However, for European CLOs, the agency relied upon an alternative approach and computed the WARF as the par-weighted average of the default probabilities of each of the assets in the collateral pool. For more: Click here United States: Tax Consequences Of Re-Pricing To CLOs Apr 22, 2013; Source: Mondaq; By: Bruce E. Kayle , Andrew R. Walker , Randy Clark & Lysondra E. Ludwig Re-pricings of debt instruments have increased over the last year. Re-pricing involves resetting the interest rate of the debt instrument, with the holders either accepting the new terms or being redeemed. Re-pricings frequently affect offshore securitization vehicles, such as collateralized loan obligation and collateralized debt obligation issuers (which we refer to collectively in this Client Alert as “CLO issuers”), and may involve either debt issued by the CLO issuer or debt instruments held by the CLO issuer in its portfolio. For more: Click here Issuer’s market: Covenant-lite loan volume nears all-time record Apr 22, 2013; Source: LeveragedLoan.com; By: Tim Cross Covenant-lite loan volume in the U.S. so far in 2013 has topped levels seen during all of 2012, and is fast approaching the full-year record set in the pre-Lehman market of 2007, according to S&P Capital IQ/LCD. Year-to-date cov-lite loan volume stands at $93.5 billion, as issuers and private equity firms rush to take advantage of an accommodating institutional investor market that is sitting atop a seemingly evergrowing mountain of cash. For more: Click here
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Volume boosted by pulling CLOs forward Apr 19, 2013; Source: SCI US CLO new issuance increased nearly five-fold in Q1 compared to the same period in 2012, though issuance is likely to level off as the year progresses, Fitch says. First quarter volumes stand at over US$26bn (compared to US$6bn in 1Q12), with the general consensus being that they will finish the year in the US$55bn-US$75bn range. Much of the first quarter volume appears to be a result of 'pulling forward' future transactions, Fitch suggests. The main reason for this may be the FDIC's rule requiring banks to consider CLO investments among its 'higher risk assets'. The rule, which went into effect on 1 April, led many originators to accelerate new deals before the first quarter came to a close. For more: Click here RPT-Fitch: Skyrocketing U.S. CLO issuance likely to level off Apr 18, 2013; Source: Reuters (The following statement was released by the rating agency) Issuance of new U.S. CLOs increased nearly five-fold in the first quarter compared to the same period in 2012, though issuance is likely to level off as the year progresses, according to Fitch Ratings. The new rate of new CLOs coming to market rose substantially in first-quarter 2013 (1Q'13), finishing the quarter at over $26 billion (compared to $6 billion in 1Q'12). That said, the general consensus remains that new CLOs will finish the year in the $55 billion-$75 billion range. The primary reason is that much of the first quarter volume appears to be a result of "pulling forward" future transactions. For more: Click here Euro CLO equity returns examined Apr 17, 2013; Source: SCI The average European CLO equity cashflow return recovered to 10.5% in 2012 from 8.5% in 2011, according to JPMorgan. However, significant dispersion remains: strong equity returned 15%-20% last year, but up to a quarter of the market returned 0% due to widespread OC failure. By way of comparison, the average US CLO equity return was 26.8% last year. Reasons for underperformance include the weaker European credit recovery, less loan issuance to rebuild par and excess spread, and fewer loans with interest rate floors. For more: Click here Loan-fund assets jump to record level in March, capping banner 1Q Apr 17, 2013; Source: LeveragedLoan.com In March, the assets under management of loan mutual funds climbed 6.9%, or $7.2 billion, to a record $110.6 billion, according to data from Lipper FMI and Yahoo! Finance. In absolute terms it was the sector’s second-biggest month of growth, behind only February 2011’s $7.4 billion. On a percentage basis, meanwhile, it trailed February 2013’s 7.2% ($7 billion) increase. March’s tally puts an exclamation point on the first quarter’s torrid growth rate. Over the first three months of the year loan-fund assets grew by $19.7 billion, or 21.7%. That is the largest quarterly dollar increase ever, and the biggest percentage gain since the first quarter of 2011, when AUM jumped 31.1%. For more: Click here
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Leveraged loan bids rise in trading mart amid investor cash inflow Apr 16, 2013; Source: LeveragedLoan.com The steady stream of institutional investor cash flowing into the U.S. leveraged loan market over the past few quarters has led to increasingly lofty prices in the secondary. The average loan bid, per the S&P/LSTA Index, climbed to a healthy fiveeighths of a point in March, to 98.17 at quarter-end. That’s the highest it’s been in almost six years (since before the Lehman bankruptcy). For more: Click here United States: CLO 1.0 vs. 2.0 – Part I Of A Series: Re-Pricings Apr 12, 2013; Source: Mondaq; By: Deborah Festa , Nicholas Robinson & Jerry A. Wang The recent strong resurgence of activity in the U.S. collateralized loan obligation (CLO) market has sparked significant interest in the distinguishing characteristics of post-credit crisis CLOs ("CLO 2.0") as compared with their pre-2008 predecessors ("CLO 1.0"). In general, CLO 2.0 transactions feature higher levels of subordination, tighter collateral eligibility requirements, and shorter non-call and reinvestment periods. There are many other important distinguishing characteristics as well. This is the first in a series of Milbank client alerts that will take a close look at new concepts or new variations of old concepts that have started to become common in CLO 2.0 documentation. For more: Click here Downward prices flexes highlight investor demand in leveraged loan market Apr 12, 2013; Source: LeveragedLoan.com “Market flex” activity – when pricing on a leveraged loan is cut or increased during the syndications process, depending on investor demand – has been one of the simplest ways to gauge just how hot the leveraged loan market is. For more: Click here
With credit cheap, leveraged loan repricing volume skyrockets Apr 10, 2013; Source: LeveragedLoan.com There’s been much consternation in the leveraged finance market this year because, amid impressive loan activity, lucrative LBO and M&A deals have been scarce, compared to low- or no-fee repricing deals, where issuers simply hit up existing lenders for cheaper money. For more: Click here
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Private equity loan volume surges. But where are the LBOs? Apr 09, 2013; Source: LeveragedLoan.com Private equity firms have been tapping the leveraged loan market at an impressive clip so far in 2013, undertaking some $114 billion in U.S. credits during the first quarter. That’s nearly half the total recorded for all of 2012. For more: Click here
1Q 2013: US Leveraged Loan Market Analysis Apr 09, 2013; Source: LeveragedLoan.com Before getting into our usual market analysis, let’s review the state of play for the loan market in the first quarter of 2013. With the bulls running, issuers flooded the zone to refinance seasoned loans and finance dividends. Leveraged loan volume climbed, therefore, to a post credit crunch high of $185 billion between January and March. Most of this issuance, however, was churn. For more: Click here S&P: European M&A activity to remain quiet due to regional worries Apr 09, 2013; Source: LeveragedLoan.com In a new report entitled “The Credit Cloud: For Now, Caution Is Holding Back European Mergers And Acquisitions”, Standard & Poor’s comments that M&A will remain subdued in Europe over the next six months. The report explains why European companies remain cautious about M&A activity, in contrast to the relative exuberance of their North American counterparts. To March 15, 2013, the value of European M&A deals was $49.2 billion, which is 51% lower by value than the same period last year, and 74% lower than North America’s $188.6 billion in the same time frame, according to S&P. For more: Click here JPMorgan Forecasts European CLO Sales of as Much as $5 Billion Apr 08, 2013; Source: Bloomberg; By: Patricia Kuo Collateralized loan obligations will raise $3 billion to $5 billion in Europe this year, according to a forecast from JPMorgan Chase & Co. (JPM). CLO formation in the region will increase global issuance to as much as $75 billion, JPMorgan analysts led by Londonbased Rishad Ahluwalia wrote in an April 5 report. For more: Click here CLO 2013 Outlook: Good opportunities for significant returns Apr 04, 2013; Source: Hedgeweek; By: James Williams The CLO market enjoyed a resurgence of sorts in 2012 with approximately USD50billion in new issuance, overshadowing the paltry figure of around USD13billion in 2011. Much of this CLO activity remains in the US, where major players such as Dallas-based Highland Capital Management LP – the largest US CLO manager by AUM (approximately USD14billion) – and New York-based BlueMountain Capital Management continue to originate deals. For more: Click here
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With M&A scarce (save Heinz), 1Q LBO loan volume totals unimpressive $26B Apr 04, 2013; Source: LeveragedLoan.com LBO activity continues to disappoint in the leveraged finance markets, especially compared to hopes of a willing institutional investor base with lots of cash to put to work. For more: Click here European leveraged loan volume hits 6-year high though activity remains light Apr 04, 2013; Source: LeveragedLoan.com Leveraged loan volume in Europe during the first three months of 2013 totalled €15.5 billion. That’s the strongest quarter in six years, though it’s a fraction of activity seen in the heyday of the market, in 2007. For more: Click here
Cash inflows to leveraged loan market soar in first quarter, thanks to CLOs Apr 03, 2013; Source: LeveragedLoan.com Institutional investors flocked to the leveraged loan market during 2013′s first quarter, with some $39 billion in cash flowing into investor coffers courtesy CLO issuance and loan mutual funds. For more: Click here
Leveraged loan default rate hits 2-year high thanks to directories deals Apr 01, 2013; Source: LeveragedLoan.com; By: Steve Miller In March, the loan market was haunted by three defaults from cycles past, all out of the directories sector: • SuperMedia (formerly Idearc) and Dex One (formerly RH Donnelly) both filed prepackaged bankruptcies as part of their merger agreement. • Hubu (formerly Yell) missed a payment on its 2009 credit facility, prompting S&P to downgrade the issuer to D, from CC. For more: Click here
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Leveraged loan volume hits post-Lehman high amid refinancing, CLO rush Apr 01, 2013; Source: LeveragedLoan.com; By: Steve Miller Amid a massive injection of liquidity thanks largely to CLO issuance and mutual fund inflows, new-issue leveraged loan volume climbed to a post-credit-crunch high of $185.2 billion in the first quarter, from $136.8 billion in the fourth quarter and from $115.1 billion during first three months of 2012. Indeed, the last time volume was higher was in the second quarter of 2007, when a record $187.6 billion was completed. For more: Click here
1Q Loan Investor Market: CLOs, Funds Dominate Leveraged Loan Mart Amid Investor Inflows Mar 27, 2013; Source: LeveragedLoan.com; By: Steve Miller In the first quarter, asset managers’ share of leveraged loan allocations jumped to a record 90.3%, from 84.8% in 2012, amid an onslaught of institutional loan refinancings, which dominated primary activity during the opening months of the year. Within the institutional investor segment, bountiful CLO issuance and inflows to loan mutual funds allowed these traditional investor constituencies to tighten their grip on primary institutional loan allocations. For more: Click here CLO issuance near record 2007 levels Mar 27, 2013; Source: Financial Times; By: Stephen Foley Investors who bought the riskiest portions of one of the most exotic credit market instruments sold in the run-up to the financial crisis actually made more money than they forecast, despite the meltdown, according to analysis. The data, published by JP Morgan, helps to explain the recent soaring demand for equity in so-called “collateralised loan obligations”, a highly-leveraged investment vehicle that buys corporate bank loans. For more: Click here Loan mutual funds rake in another $1.36B of investor cash; 2nd-largest haul ever Mar 21, 2013; Source: LeveragedLoan.com; By: Jon Hemingway March 20, by weekly reporters only. This is the 30th consecutive week with inflows to the asset class, for $17.2 billion over that span. This is the second largest weekly inflow ever following $1.42 billion in the Feb. 13 week. It is up from $1.15 billion last week and above the $1.2 billion four-week trailing average. Inflows totaling at least $1 billion have now been recorded in six of the past seven weeks. For more: Click here
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LBO volume hits post-2007 high but pipeline remains thin Mar 21, 2013; Source: LeveragedLoan.com Buoyed by Berkshire Hathaway and 3G’s $28 billion take-private transaction for Heinz – the largest execution since the mega-deal era of 2006-2007 – the volume of announced LBOs in the first quarter stands at a six-year high of $78.2 billion (or $54.2 billion excluding Michael Dell and Silver Lake’s proposed $24 billion LBO for the computer maker, which remains in a go-shop period through March 22), up from $29.8 billion in the fourth quarter and $19.2 billion during the first three months of 2012. For more: Click here Amid investor demand, leveraged loan returns slump from 2012 pace Mar 21, 2013; Source: LeveragedLoan.com Leveraged loans have returned 1.72% for institutional investors so far in 2013. That’s down significantly from this point a year ago (3.22%). The drop should come as no surprise, what with record amounts of cash flowing into loan mutual funds, meaning demand for loan paper is high. Indeed, loan mutual funds assets under management continue to grow, recently topping $100 billion for the first time. For more: Click here
Ireland: European CLOs - Key Advantages Of Irish CLO Issuers Mar 19, 2013; Source: Mondaq; By: Nollaig Murphy , Andrew Quinn , David Maughan and William Fogarty Following the significant uptick in US Collateralised Loan Obligation ("CLO") activity over the last three quarters, European CLO activity appears to have recently followed this trend. European arrangers and CLO managers are welcoming the fact that Pramerica Investment Management is marketing their new €315.8 million CLO and that Cairn Capital successfully launched the first recent European CLO since the financial crisis. These new deals are perhaps the first real indicators that the European CLO market is on the way back. Ireland is one of the most popular jurisdictions for the establishment of European CLO issuers. In 2012 approximately 100 CLOs (mostly US) listed on the Irish Stock Exchange. The benefits of using Irish Special Purpose Vehicles ("SPVs") for CLO transactions are set out below. For more: Click here
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Markit Launches CLO Pricing Service May 02, 2013; Source: Markit
Investing
Markit, a leading, global financial information services company, today announced the launch of a new service for the pricing of collateralised loan obligation (CLO) tranches. Markit’s new service covers more than 5,000 investment grade tranches of US and European CLOs and was launched in response to demand from customers for a high quality, independent data source for CLO pricing For more: Click here Ancestry.com preps refinancing of leveraged loan backing 2012 LBO May 02, 2013; Source: LeveragedLoan.com; By: Kerry Kantin Morgan Stanley has scheduled a lender call for 10:00 a.m. EDT tomorrow, May 3, to launch a repricing and refinancing Ancestry.com’s 2012-vintage LBO loan, according to sources. The issuer is seeking to carve out a $200 million, five-year amortizing B-2 term loan from the $670 million B covenant-lite term loan maturing in December 2018, while also seeking to reprice the balance of the loan outstanding following a $30 million paydown using cash from the balance sheet, sources said. For more: Click here JMP Group Announces Closing of CLO Transaction Apr 30, 2013; Source: Heraldonline.com JMP Group Inc. (NYSE: JMP), an investment banking and alternative asset management firm, announced today the closing of a $343.8 million collateralized loan obligation, or CLO, transaction issued by two newly formed special purpose vehicles and backed primarily by a diversified portfolio of broadly syndicated leveraged loans. The senior notes offered in the transaction are issued by JMP Credit Advisors CLO II Ltd. and co-issued in part by JMP Credit Advisors CLO II LLC and are subject to a two and a half-year non-call period. For more: Click here Investco sells Armacell to Charterhouse for more than €500M Apr 30, 2013; Source: LeveragedLoan.com Investcorp has agreed to sell Armacell to Charterhouse for more than €500 million, the private equity company confirmed in a statement this morning. The agreement revives a deal that had looked in jeopardy just a few weeks ago, when sources suggested sponsor Investcorp was looking at a recapitalisation of the firm. For more: Click here JC Penney joins institutional calendar with $1.75B leveraged loan Apr 29, 2013; Source: LeveragedLoan.com J.C. Penney’s new loan deal will be a syndicated transaction that’s likely to come to market in as little as two weeks, although timing hasn’t been nailed down yet, sources said. The transaction will be all new money for institutional loan investors. The retailer disclosed today that it has obtained a commitment letter from Goldman Sachs, providing a $1.75 billion, five-year senior secured term loan that is secured by real estate and other company assets. For more: Click here
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ICG and Lloyds discuss Europe’s largest CLO since the crisis Apr 28, 2013; Source: Financial Times; By: Michael Stothard Intermediate Capital Group and Lloyds Bank are in talks on the largest collateralised loan obligation in Europe since the financial crisis, adding to hopes that a once important source of funding for business in the region is making a comeback. ICG, the London-based provider of sub-investment-grade financing, has started fundraising for a €400m structured loan vehicle, according to sources with knowledge of the deal. The deal is expected to close over the summer. For more: Click here Coinmach sets $1.17B 1st- and 2nd-lien leveraged loan package for LBO by Pamplona Apr 25, 2013; Source: LeveragedLoan.com; By: Chris Donnelly A Deutsche Bank-led arranger group is providing $1.17 billion of first- and second-lien loans to back Pamplona Capital Management’s purchase of Coinmach Services, sources said. The transaction also encompasses the acquisition of another business operating in one of Coinmach’s business lines. The transaction will include a $75 million, five-year revolver, a $770 million, 6.5-year first-lien term loan and a $325 million, sevenyear second-lien term loan. The term loans will be covenant-lite, sources noted. For more: Click here Albertson’s launches repricing, partial extension of $1.15B leveraged loan Apr 24, 2013; Source: LeveragedLoan.com; By: Chris Donnelly Citigroup, Bank of America Merrill Lynch, Credit Suisse and Morgan Stanley this afternoon launched a repricing forAlbertson’s that would also extend the maturity of $700 million of the supermarket operator’s $1.15 billion TLB by approximately three years, according to sources. The proposed transaction is split between a $450 million tranche that would have the same March 21, 2016 maturity as the $1.15 billion term loan that was syndicated in February and $700 million, six-year tranche. For more: Click here Refinanced CLO notes syndicated Apr 23, 2013; Source: SCI The triple-A, single-A and triple-B rated tranches of the 2011-vintage OHA Intrepid Leveraged Loan Fund were refinanced last week. Unlike other recent CLO refinancings (SCI 8 March), the Oak Hill Advisors deal refinancing was syndicated (via Morgan Stanley). The new coupons on the class A, C and D tranches are 92bp, 200bp and 305bp over Libor, down from 150bp, 230bp and 330bp respectively. To achieve further reductions in its refinanced coupons, the reinvestment period - which was scheduled to end in October 2014 - was terminated. For more: Click here Peninsula Gaming preps repricing of $823M leveraged loan Apr 23, 2013; Source: LeveragedLoan.com; By: Chris Donnelly Bank of America Merrill Lynch, J.P. Morgan, and Deutsche Bank are launching a repricing of Peninsula Gaming’s $823 million B term loan due Nov. 20, 2017, sources said. Talk hasn’t emerged yet, but the repriced loan will include six months of 101 soft call protection. For more: Click here
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Fund announces tie-up with former GSO Capital CLO buyer Apr 22, 2013; Source: Creditflux UK-listed investment vehicle Greenwich Loan Income Fund has announced that it has hired a company set up by former GSO structured credit specialist Miguel Ramos Fuentenebro to advise it on its CLO investments. Ramos set up GMB Partners last year after leaving GSO Capital, where he was portfolio manager for the Carador Income Fund. Greenwich Loan Income Fund currently invests in a single CLO, the T2 Income Fund CLO I. For more: Click here CCC Information services (Leonard Green) eyes $470M loan refinancing Apr 22, 2013; Source: LeveragedLoan.com; By: Chris Donnelly Goldman Sachs and J.P. Morgan have set a lender call at 3:00 p.m. EDT today to launch a repricing of CCC Information Services’ $470 million covenant-lite term loan, sources said. Price talk hasn’t emerged yet. The seven-year term loan backed Leonard Green & Partners’ $1.1 billion acquisition of CCC Information Services from Investcorp. The term loan was issued at 99.5 and is priced at L+400 with a 1.25% LIBOR floor. The repricing will trigger the existing loan’s 101 soft call premium. CCC Information is rated B/B3, with the loan at B+/B1. For more: Click here Blackstone’s GSO Said to Plan Its First Europe CLO Since ’08 Apr 18, 2013; Source: Bloomberg; By: Patricia Kuo & Esteban Duarte GSO Capital Partners LP, the credit unit of Blackstone Group LP, (BX) plans to issue a 403.7 million-euro ($527 million) collateralized loan obligation for its first European deal since 2008, according to two people with knowledge of the matter. The Grand Harbour I BV will include a 240 million-euro AAA rated portion and a 48.7 million-euro so-called equity piece, said the people, who asked not to be identified because the deal is private. Citigroup Inc. (C) is arranging the transaction which would be the largest in Europe this year, according to data compiled by Bloomberg. For more: Click here RLPC: Oak Hill sees year's first CLO tranche refi Apr 16, 2013; Source: Reuters; By: Billy Cheung Taking advantage of falling yields in a strong collateralized loan obligation market, Oak Hill Advisors LP has refinanced three tranches of a 2011-vintage CLO called OHA Intrepid Leveraged Loan Fund. This deal marks the first selected tranche refinancing of the year and may portend similar moves from CLO equity owners attempting to offset a wave of downward repricing in their loan portfolios. For more: Click here Madison Dearborn lines up banks for National Financial Partners LBO Apr 15, 2013; Source: LeveragedLoan.com; By: Kerry Kantin Deutsche Bank, Morgan Stanley and UBS have committed to provide debt financing backing Madison Dearborn’s planned $1.3 billion acquisition of National Financial Partners, a provider of benefits, insurance and wealth-management services. Under the terms of the agreement, which was announced this morning, NFP shareholders will receive $25.35 in cash for each share of common stock they hold. This represents a 26% premium over the closing price on March 12, which was the last trading day before press reports began circulating that the company was considering a sale. For more: Click here
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Pramerica goes unconventional with CLO Apr 12, 2013; Source: International Financing Review; By: Anil Mayre Pramerica last week priced only the second CLO since the global financial crisis, treading a thin line between the innovative and the unconventional to get the deal done. Dryden XXVII Euro CLO 2013 via Barclays stands out for a number of reasons. Its large bond bucket provides a solution to the problems of scarce loan supply. Pramerica is targeting a €291m portfolio, with a minimum 75% investment in senior secured loans and bonds. However, there appears to be no restriction on the bond format, the only stipulation being that they are senior secured. For more: Click here Apollo Said to Sell $436 Million CLO for First Europe Deal Apr 12, 2013; Source: Bloomberg; By: Patricia Kuo & Esteban Duarte Leon Black’s Apollo Global Management LLC (APO) priced an increased 334 million-euro ($436 million) collateralized loan obligation for its first deal in Europe, according to three people with knowledge of the matter. The ALME Loan Funding 2013-1 Ltd. includes 195 million euros of AAA rated notes paying 130 basis points more than the euro interbank offered rate, said the people, who asked not to be identified because the deal is private. The deal was increased from 306.5 million euros it sought in March, according to data compiled by Bloomberg. For more: Click here Europe: Adler Modemarkte buyers line up €71 million loan backing take-private bid Apr 12, 2013; Source: LeveragedLoan.com; By: David Cox Commerzbank and IKB Deutsche Industriebank have been mandated to arrange a €71 million senior secured loan supporting the take-private of Adler Modemarkte, the German textile retailer. Steilmann Holding, Bergkamen, and Exalibur are leading the bid, and a share purchase scheme has already been agreed with bluO International Affiliates for 49.96% of the shares. For more: Click here Carlyle Plans First Euro CLO Since ’08; U.S. Inflows Set Record Apr 12, 2013; Source: Bloomberg; By: Krista Giovacco Carlyle Group LP (CG) is planning to raise a 300 million-euro ($392 million) collateralized loan obligation, while U.S. inflows to floating-rate funds exceeded $1.5 billion this week, setting a record. The world’s second-biggest private equity firm by assets is seeking its first European CLO since 2008 that will be arranged by Barclays Plc, according to three people with knowledge of the matter who asked not to be identified because the information is private. At least 90 percent of the fund will be backed by senior secured loans. For more: Click here NXT Capital Closes $358 Million CLO Apr 08, 2013; Source: NXT Capital NXT Capital, LLC announced that it has closed NXT Capital CLO 2013-1, a $358 million CLO. The financing, NXT’s second CLO in less than a year, is secured almost exclusively by middle-market senior secured loans originated by NXT and has a three-year reinvestment period. NXT sold securities rated from AAA through BB and retained all the equity interests. Pricing on the AAA-rated securities of LIBOR+1.50% was a post-crisis low for an exclusively middle-market CLO. For more: Click here
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Alcentra Said to Hire JPMorgan for First European CLO Since 2008 Apr 08, 2013; Source: Bloomberg; By: Patricia Kuo Alcentra Ltd., the money manager owned by the Bank of New York Mellon Corp. (BK), hired JPMorgan Chase & Co. (JPM) for its first European collateralized loan obligation since 2008, according to three people with knowledge of the matter. The bank is setting up investor meetings for the deal, said the people, who asked not to be identified because the deal is private. Alcentra Chairman David Forbes-Nixon declined to comment. Kate Haywood, a spokeswoman in London with JPMorgan, also declined to comment. For more: Click here Pearl Diver Plans $250 Million for Fourth Fund to Invest in CLOs Apr 04, 2013; Source: Bloomberg; By: Patricia Kuo Pearl Diver Capital LLP, a London- based money manager, is raising its fourth fund to invest in collateralized loan obligations as deal volume grows in the U.S. and Europe. PDC Opportunities IV will raise about $250 million before first closing by early May, Chandrajit Chakraborty, managing partner and co-founder of Pearl Diver, said in a telephone interview. For more: Click here 40|86 Advisors Closes New $400M CLO Transaction Apr 04, 2013; Source: PR Newswire 40|86 SM Advisors, Inc., a wholly-owned subsidiary of CNO Financial Group, Inc., announces the closing of Cedar Creek CLO, a $413.25 million collateralized loan obligation. The transaction was placed by Goldman Sachs and closed on March 28, 2013. The CLO has a four-year reinvestment period and a two-year non-call period, with a stated maturity of April 2024. 40|86 Advisors, a leading fixed-income investment advisor, will serve as collateral manager. For more: Click here RPT-Fitch: April SME CLO Compare - Uptake in SME CLO Issuance Apr 04, 2013; Source: Reuters, Fitch Fitch Ratings has published an updated version of its SME CLO Compare. The report is updated on a monthly basis. On 15 March 2013, Fitch assigned final rating to a new Italian SME CLO transaction, Pontormo SME Srl. The senior class A1, A2 and A3 notes which benefit from 40.6% credit enhancement (CE) were rated at 'AAsf', Outlook Stable. Pontormo SME Srl is a multioriginator cash flow securitisation of a EUR375.9m static portfolio of secured and unsecured loans granted to small- and mediumsized enterprises in Italy, originated by Banca di Credito Cooperativo di Fornacette S.c.p.a, Banca di Credito Cooperativo di Castagneto Carducci S.c.p.a. and Banca Popolare di Lajatico S.c.p.a. all of which are not rated by Fitch. For more: Click here American Capital Closes $414 Million Managed CLO Apr 01, 2013; Source: American Capital American Capital, Ltd. (Nasdaq: ACAS) ("American Capital") announced today that an affiliate, ACAS CLO 2013-1, Ltd. (the "CLO"), has closed on the sale of $414 million of collateralized loan obligation bonds. The transaction was arranged by Deutsche Bank Securities Inc. The CLO is externally managed by American Capital Leveraged Finance Management, LLC, a subsidiary of American Capital Asset Management, LLC, a wholly-owned portfolio company of American Capital, for an annual management fee of 50 basis points of total assets. For more: Click here
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The Carlyle Group Closes $623 Million CLO Global Market Strategies Structured Credit Team Completes Second CLO of 2013 Apr 01, 2013; Source: The Carlyle Group Global alternative asset manager The Carlyle Group (NASDAQ: CG) today announced the closing of a $623 million Collateralized Loan Obligation (CLO) fund, the firm’s second new-issue CLO of the year. Carlyle Global Market Strategies CLO2013-2 will invest in corporate leveraged loans and high yield bonds. Morgan Stanley arranged the transaction. For more: Click here Onex Credit Partners Completes Third CLO Offering Apr 01, 2013; Source: Marketwire Onex Corporation ("Onex") (TSX:OCX) today announced that Onex Credit Partners, LLC completed its third collateralized loan obligation ("CLO") offering in a private placement transaction that raised $512 million, including $24 million from Onex. A CLO is a leveraged structured vehicle that holds a widely diversified collateral asset portfolio that is funded through the issuance of longterm debt in a series of rated tranches of secured notes and equity. For more: Click here Prudential Fixed Income to manage new $420 million CLO Apr 01, 2013; Source: Prudential Financial, Inc. Prudential Fixed Income has been appointed the collateral manager for the recently closed $420 million Dryden XXVI Senior Loan Fund, the company announced today. Prudential Fixed Income is the principal public fixed income asset management business of Prudential Financial, Inc. PRU +1.01%. "We appreciate the support of investors and their trust in our credit and CLO management capabilities," said Joe Lemanowicz, principal and head of Prudential Fixed Income's U.S. bank loan team. For more: Click here CVC Credit Sees Deal Picking Outweigh Diversity for CLO Returns Mar 27, 2013; Source: Bloomberg; By: Patricia Kuo CVC Credit Partners LLC, which manages $8.5 billion across 28 funds, focuses more on deal picking than diversity to generate double-digit returns for the riskiest portions of its European collateralized loan obligations. CVC’s Cordatus Loan Fund I and II are providing annualized gains of more than 20 percent, while Cordatus Recovery Partners I generated 10 percent for investors last year, according to Jonathan Bowers, a London-based partner and senior portfolio manager for Europe at CVC Credit Partners, the debt investment arm of CVC Capital Partners Ltd. For more: Click here Cairn closes first new European arbitrage CLO Mar 25, 2013; Source: Hedgeweek Cairn Capital has closed Cairn CLO III BV, its new EUR300m CLO and the first-to-market European arbitrage CLO since 2008. The transaction, which is designed to be compliant with European risk retention requirements, is the first of several European CLOs expected to close this year. Milbank advised Cairn Capital in its capacity as collateral manager on the legal structuring of the transaction and with the negotiation of the transaction documents. For more: Click here
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RPT-Fitch: May SME CLO compare May 01, 2013; Source: Reuters & Fitch
Ratings
(The following statement was released by the rating agency) Fitch Ratings has published the May edition of its SME CLO Compare. The report is updated on a monthly basis. Fitch assigned final ratings on 5 April to IM Cajamar Empresas 5 F.T.A., a Spanish securitisation of a static pool of secured and unsecured loans to small- and medium-sized enterprises (SMEs) and self-employed individuals (SEIs), originated by Cajamar Caja Rural and Caja Rural del Mediterraneo, Ruralcaja. For more: Click here Rating Action: Moody's assigns ratings to two classes of notes issued by Mountain View CLO 2013-1 Ltd. May 01, 2013; Source: Moody’s Moody's Investors Service announced that it has assigned the following ratings to notes issued by Mountain View CLO 2013-1 Ltd. (the "Issuer" or "Mountain View CLO"): U.S. $4,000,000 Class X Senior Term Notes due 2024 (the "Class X Notes"), Definitive Rating Assigned Aaa (sf) U.S. $253,000,000 Class A Senior Term Notes due 2024 (the "Class A Notes"), Definitive Rating Assigned Aaa (sf). RATINGS RATIONALE Moody's ratings of the Class X Notes and the Class A Notes (collectively, the "Notes") address the expected losses posed to noteholders. The ratings reflect the risks due to defaults on the underlying portfolio of loans, the transaction's legal structure, and the characteristics of the underlying assets. For more: Click here Rating Action: Moody's upgrades EUR 13M CLO notes of Clarenville CDO S.A. Apr 30, 2013; Source: Moody’s Moody's Investors Service announced today that it has upgraded the rating of the Class A-2 notes issued by Clarenville CDO S.A.: ....EUR13M Class A-2 Senior Secured Floating Rate Notes, due 2016, Upgraded to Aaa (sf); previously on May 9, 2012 Upgraded to Aa1 (sf) Moody's also affirmed the ratings of the following notes issued by Clarenville CDO S.A.: ....EUR145M (current balance EUR9,3M) Class A-1a Senior Secured Floating Rate Notes, due 2016, Affirmed Aaa (sf); previously on Jul 12, 2011 Upgraded to Aaa (sf) For more: Click here Fitch to Rate Brookside Mill CLO Ltd.; Presale Issued Apr 30, 2013; Source: Fort Mill Times Fitch Ratings expects to assign the following ratings to Brookside Mill CLO Ltd.: --$2,250,000 class X notes 'AAAsf'; Outlook Stable; --$237,000,000 class A-1 notes 'AAAsf'; Outlook Stable;
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--$40,000,000 class A-2 notes 'AAAsf'; Outlook Stable. KEY RATING DRIVERS Sufficient Credit Enhancement: Credit enhancement (CE) of 38.4% for class A-1 and A-2 (together, class A) notes, in addition to excess spread, is sufficient to protect against portfolio default and recovery rate projections in an 'AAAsf' stress scenario. The degree of CE available to the class A notes is slightly above the average for recent CLO issuances. The class X notes are expected to be paid in full from the interest waterfall within 1.5 years of close. For more: Click here RPT-Fitch: CLO Loan Maturity Extensions Offset by Rising Spreads Apr 26, 2013; Source: Reuters & Fitch (The following statement was released by the rating agency) Fitch Ratings expects European leveraged loan collateralised loan obligations (CLOs) to maintain rating stability throughout the rest of 2013. Fitch's April 2013 European Leveraged Loan CLO Tracker Excel file (CLO Tracker) reveals that the 'CCC' and below bucket has remained stable at 9.2% since October 2012. There have been 13 reported defaults since March 2012. Defaults have tended to come from cyclical industries with Broadcasting and Media, Building and Materials and Retail among the sectors experiencing defaults. The current average defaulted balance has increased to 2.6% from 2.2% this time last year. For more: Click here RPT-Fitch: No Rating Impact on Harbourmaster Pro-Rata CLO 2 from Counterparty Change Mar 26, 2013; Source: Reuters & Fitch (The following statement was released by the rating agency) Fitch Ratings says that the ratings of Harbourmaster Pro-Rata CLO 2 B.V. will not be affected by the change in the class A1 VF Noteholder. In terms of eligibility, the transaction documents envisage minimum Fitch ratings of 'A+'/'F1' for a holder of the A1VF notes. Although each of the previous and new class A1 VF Noteholders have been rated below this required threshold, their current ratings ('A'/'F1') are able to support structured finance liability ratings of up to 'AAAsf', according to Fitch's counterparty criteria for structured finance transactions. For more: Click here
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Europe: Levett and Agafonova join CVC Credit Partners Apr 18, 2013; Source: LeveragedLoan.com; By: Sarah Husband
People
Stuart Levett and Julia Agafonova have joined CVC Credit Partners, the firm announced today. Levett joins as a managing director focused on the group’s European trading activity, while Agafonova joins as a director of fund administration and will lead the European operations team. For more: Click here Jefferies hires Morgan Stanleys’ Rodolakis as European lev fin co-head Apr 16, 2013; Source: LeveragedLoan.com Jefferies has hired Nicholas Rodolakis as managing director and European co-head of leverage finance origination, based in London. In his new role, Rodolakis will partner with fellow co-head Chris Auld and lead Jefferies’ European leveraged finance and investment banking business. For more: Click here NXT Capital hires Stuart Smartt as head of healthcare group in Chicago Apr 10, 2013; Source: LeveragedLoan.com; By: Kelly Thompson Stuart Smartt has joined NXT Capital in Chicago to head the healthcare group, the Chicago-based finance company announced this morning. Smartt will oversee origination and senior-secured lending to private equity sponsors targeting middle-market companies in the healthcare industry. Smartt will report to John Finnerty, head of corporate finance. Smartt joins NXT Capital from CIT, where he was a director in CIT’s healthcare unit For more: Click here Leveraged Finance Fights Melanoma benefit planned for May 21 Apr 08, 2013; Source: LeveragedLoan.com The second annual Leveraged Finance Fights Melanoma benefit cocktail party is planned for May 21 at the Summer Garden and Sea Grill at Rockefeller Center. Funds raised at the event will support the Melanoma Research Alliance, a private funder of research founded under the auspices of the Milken Institute. The hosts are Jeff Rowbottom from KKR Capital Markets and Brendan Dillon from UBS. The host committee includes the biggest names in leveraged finance, spanning all the top banks, many investment houses, several law firms, select issuers, and some private equity sponsors. For more: Click here TPG Capital Said to Hire GSO’s Paolillo to Run New CLO Group Mar 22, 2013; Source: Bloomberg; By: Kristen Haunss TPG Capital, the private-equity firm run by David Bonderman and James Coulter, hired Douglas Paolillo to run a new group that will manage collateralized loan obligations, according to four people with knowledge of the matter. Paolillo, previously a managing director at Blackstone Group LP-owned GSO Capital Partners LP, will be based in New York, said the people, who asked not to be identified because the hiring hasn’t been announced publicly. Owen Blicksilver, a spokesman for TPG with Blicksilver Public Relations Inc., and Paolillo declined to comment. Christine Anderson, a Blackstone spokeswoman, declined to comment. For more: Click here
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Cutwater Asset Management taps Alex Jackson to build out bank loan group Mar 20, 2013; Source: LeveragedLoan.com; By: Kerry Kantin Cutwater Asset Management announced this week that Alex Jackson has joined the firm as a managing director and head of the bank loan group. Prior to joining Cutwater, Jackson worked for CIFC, where he was deputy chief investment officer and a CLO portfolio manager. Armonk, N.Y.-based Cutwater is looking to build out a bank loan group amid a recent surge in investor interest in floating-rate debt. In the near term, the firm plans to build out a CLO management business and make some allocations to the leveraged loan asset class within its existing funds and subsequently build out a related suite of products in the bank loan asset class, such as managed accounts, according to Jackson and Jason Cameron, the head of Cutwater’s existing CLO investment business. For more: Click here Credit Suisse’s David Miller named co-head of global credit products Mar 19, 2013; Source: LeveragedLoan.com David Miller, head of global credit products capital markets at Credit Suisse, is being elevated to co-head of global credit products. Phil DeSantis, who was co-head of global credit products, is exiting the firm. Miller will now be co-head of the unit with Eraj Shirvani. For more: Click here Benji Cheung to join Credit Suisse’s sales desk Mar 19, 2013; Source: LeveragedLoan.com; By: Kerry Kantin Credit Suisse has hired Benji Cheung as a senior salesperson on its loan sales desk, according to sources. Cheung will join Credit Suisse from Morgan Stanley, where he was an executive director working in loan sales. For more: Click here
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Chris Graham Vice President
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Business Development – Research Office +44 (0) 207-138-0945 Mobile +44 (0) 7500-936-043
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