European primary market wakes; €360 million St. Paul's CLO eyed; Apollo refinances CLO

By Cristal Cody

Tupelo, Miss., Feb. 25 - 3i Debt Management Investments Ltd. sold an upsized €425 million in the Harvest VIII CLO Ltd. collateralized loan obligation transaction on Tuesday, according to an informed source.

The Harvest VIII CLO had been expected to price about €310 million of notes.

Final pricing details were not available by press time.

3i, part of London-based 3i Group plc, brought its first post-financial crisis European CLO transaction in August when it sold the €309.6 million Harvest CLO VII Ltd. offering.

The deal follows Monday's €375 million Carlyle Global Market Strategies Euro CLO 2014-1, Ltd. transaction from the Carlyle Group LP and Alcentra Ltd.'s €413.5 million Jubilee CLO 2014-XI BV offering on Jan. 24.

Coming up, Intermediate Capital Group plc is expected to price its previously announced €360 million St. Paul's CLO IV Ltd. deal by the end of the month, according to a market source.

About €10 billion to €15 billion of European CLO issuance is projected for 2014, according to J.P. Morgan Securities plc analysts.

"We foresee enough investor demand in the region, in the context of what is light issuance to begin with," the analysts said in a report.

European CLO AAA spreads are targeted to tighten to Euribor plus 135 bps to Euribor plus 140 bps, the analysts said.

The Carlyle Group sold €218.25 million of class A senior secured floating-rate notes (Aaa//AAA) at Euribor plus 140 bps.

Alcentra priced the €227 million tranche of class A senior secured floating-rate notes (Aaa/AAA/) at Euribor plus 140 bps.

In the U.S CLO market, details from the year's second CLO refinancing emerged.

Apollo Global Management, LLC refinanced the AAA tranche of the ALM V, Ltd./ALM V LLC vehicle 27 bps tighter via RBS Securities Inc., according to an informed source.

In January, Prudential Investment Management, Inc. refinanced the $304.85 million Dryden XXII Senior Loan Fund/Dryden XXII Senior Loan Fund Corp. CLO with lower coupons, also via RBS, according to the firm and market sources.

Apollo refinances CLO

The ALM V CLO refinanced the $273 million tranche of class A-1 senior secured floating-rate notes, originally priced at Libor plus 150 bps, to class A-1-R senior secured floating-rate notes (Aaa/AAA/) priced at Libor plus 123 bps, according to a market source.

Apollo originally sold the $436.7 million ALM V CLO in February 2012.

The remaining tranches of the ALM V CLO were not refinanced and will remain outstanding.

Apollo Credit Management (CLO), LLC will manage the CLO, which is collateralized primarily by broadly syndicated senior secured corporate loans.

The notes are due Feb. 13, 2023.

Proceeds from the refinancing were used to redeem in full the original class A-1 notes that were refinanced.

New York City-based Apollo Credit Management priced four CLO deals in 2013, which included the $857.06 million ALM VII(R), Ltd. and $932.22 million ALM VII(R)-2, Ltd. transactions in August, the $608.86 million ALM VIII, Ltd. offering in November and the $710.8 million ALM X Ltd./ALM X LLC vehicle in December.

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