Black Diamond brings dual currency CLO; CELF prices €414.3 million; BWIC volume thin

By Cristal Cody

Tupelo, Miss., July 13 – European CLO issuance climbed to €8.4 billion year to date following new deals from Black Diamond Capital Management, LLC and CELF Advisors LLP, according to market sources.

Black Diamond Capital Management priced a €397.4 million equivalent dual-currency CLO.

CELF Advisors brought a €414.3 million transaction.

Primary and secondary activity has remained light so far in July.

“Investors are staying on the sidelines amid the volatility from negotiations in Europe and the Chinese stock market sell-off,” BofA Merrill Lynch analysts said in a market note. “We expect the primary and secondary U.S. CLO 3.0 market to be impacted by bouts of volatility during 2H ahead of the Fed hike. Continuing demand for high yielding assets should tighten spread levels in Euro mezz tranches, but they are vulnerable to volatility.”

In the U.S. secondary market, BWIC volumes totaled about $450 million in the previous week, with U.S. CLO 2.0 AAA notes making up about $320 million of the total, according to BofA Merrill Lynch.

European CLO secondary market volume remained low with about €25 million appearing on BWICs over the previous week, the analysts said.

“Greece related volatility and the upcoming deadline for compliance with the Volcker Rule have also kept volumes muted so far in July, following a quiet month of trading in June,” according to the note. “Based on bonds that have traded, spreads appear to be widening, especially for 1.0 bonds higher in the capital structure.”

U.S. 2.0 CLO spreads widened by 5 basis points to 25 bps in the previous week, the analysts said.

Black Diamond prices

Black Diamond Capital Management priced a €397.4 million equivalent dual-currency CLO deal, according to a market source.

Black Diamond CLO 2015-1 Designated Activity Co. sold €176.3 million of class A-1 senior secured floating-rate notes at Euribor plus 130 bps in the senior tranche.

Natixis SA arranged the transaction.

Black Diamond CLO 2015-1 Advisors, LLC is the CLO manager.

The notes are due 2029.

The offering has a two-year non-call period and a four-year reinvestment period.

The CLO is backed primarily by euro-denominated senior secured corporate loans.

Black Diamond is an alternative asset management firm located in Greenwich, Conn., Lake Forest, Ill., and London.

CELF taps market

CELF Advisors sold €414.3 million of notes due July 30, 2029 in a CLO transaction, according to a market source.

Carlyle Global Market Strategies Euro CLO 2015-2, Ltd. priced €238,225,000 of class A-1A floating-rate note at Euribor plus 135 bps at the top of the capital structure.

Citigroup Global Markets Inc. was the placement agent.

CELF Advisors will manage the CLO.

The notes are backed mainly by senior secured obligations.

Proceeds from the deal will be used to purchase a €400 million portfolio of mostly European leveraged loans and bonds.

London-based CELF is part of the Washington, D.C.-based Carlyle Group LP.

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