Cairn Loan Investments refinances €279.3 million CLO; market mulls effects of Libor’s end

By Cristal Cody

Tupelo, Miss., July 27 – Cairn Loan Investments LLP priced a €279.3 million refinancing of CLO notes that were first sold in 2015.

More than €14 billion of euro-denominated CLOs have been refinanced or reset year to date, according to market sources.

About €9 billion of new CLOs have priced to date in 2017.

In other activity, market attention was caught by the U.K. Financial Conduct Authority’s announcement that it will phase out the benchmark Libor rate by the end of 2021.

“We believe changing the reference rate on the underlying loans may be easier than changing the underlying rate on the CLO liabilities, due to CLO amendment consent requirements,” Wells Fargo Securities, LLC analysts said in a note on Thursday. “Loans typically have a fallback option of Prime as a reference rate. Also, the loan market has the LSTA working with regulators and other parties for a solution, while the CLO market is more decentralized (each CLO is an individually negotiated fund).”

The analysts said they have “seen some recent CLO indentures from managers who appear to have anticipated such a change – these deals include a ‘Base Rate Amendment’ allowance, with a majority of each class approving. In short, Libor will be replaced by a broad Treasuries repo financing rate.”

Cairn refinances CLO

In the Cairn CLO V BV refinancing transaction, Cairn Loan Investments sold €279.3 million of notes due July 22, 2030, according to market sources.

The CLO priced €183.8 million of class A-R senior secured floating-rate notes at par to yield Euribor plus 90 basis points in the senior AAA-rated tranche.

Morgan Stanley & Co. International plc arranged the offering.

The original €308.5 million CLO priced on May 21, 2015. The CLO sold €181.8 million of the class A notes at Euribor plus 130 bps.

Cairn priced two euro-denominated CLOs in 2016.

The CLO manager is based in London.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.