Primary thins; rest of month forecast as busier; 3i brings first euro Volcker-compliant CLO

By Cristal Cody

Tupelo, Miss., July 17 – Activity in the CLO market on Thursday included a deal from TPG Global, LLC, according to a market source.

TPG brought the TICP CLO II, Ltd./TICP CLO II, LLC offering with a tranche of AAA-rated notes priced at Libor plus 145 basis points, a source said. Citigroup Global Markets Inc. arranged the deal.

TICP CLO II Management, LLC, a unit of TPG Institutional Credit Partners, LLC, will manage the CLO.

Final pricing details were not available by press time.

The transaction is the Fort Worth, Texas-based private equity firm’s second CLO. TPG Global priced its first CLO transaction, the $479 million TICP CLO I, Ltd./TICP CLO I, LLC deal, in March.

Primary action has been muted over the week following a strong start to the month, according to market sources.

Less than $10 billion of deals are in the pipeline, a source said.

“The rest of the month will still be busy because a lot of people are trying to get things done before August,” one source said.

In the European CLO market, 3i Group plc said in a statement released overnight that it has closed on the Harvest IX CLO Ltd. transaction that 3i Debt Management Investments Ltd. priced in June.

The €525 million CLO is the largest European CLO to date and is the “first loan-only Volcker compliant CLO issued in Europe,” the firm said.

The CLO is backed primarily by first lien senior secured obligations and eligible investments.

The U.S. Volcker Rule announced in December prohibits banks from owning CLOs that hold bonds.

U.S. CLOs priced in 2014 have been Volcker-compliant with collateral consisting of loans and eligible investments instead of bonds.

In 3i’s deal, €419.5 million of investment-grade debt and €105.5 million of non-investment grade mezzanine and subordinated notes were issued.

Harvest IX CLO will focus on investing in European senior secured loans that back private equity buyouts in Europe.

“We have now successfully closed eight CLOs raising €3.1 billion in just over twenty months, and in 2014 alone we have raised over €1.7 billion through four CLOs,” Jeremy Ghose, chief executive officer of 3i Debt Management, said in the release.

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