St. Paul's AAA CLO tranche priced at Euribor plus 135 bps; Alcentra closes €400 million CLO

By Cristal Cody

Tupelo, Miss., July 15 - Activity in the European collateralized loan obligation market stepped up on Monday after Intermediate Capital Group plc priced a €400 million CLO, while Alcentra Ltd. closed on its €400 million Jubilee CLO 2013-X BV deal, according to informed sources.

Intermediate Capital Group brought the euro-denominated €400 million St. Paul's CLO II Ltd. offering, which included a €240 million tranche priced at six-month Euribor plus 135 basis points and a €15 million BB+ rated tranche priced at six-month Euribor plus 550 bps.

"This is the third new CLO ICG has brought to market since the financial crisis," Dagmar Kent Kershaw, head of Intermediate Capital Group's Credit Fund Management, said in a statement. "Whilst the re-emergence of the European CLO market remains slow, we intend to fully participate and maintain our leadership in the market."

About €5 billion to €7 billion of total European CLO issuance is expected for the year as investors take into account a proposed 5% risk retention rule for CLO managers, sources said.

Alcentra, once a fixture as a premier CLO manager before the financial crisis shut the European CLO market, settled its first European CLO deal since 2008 on Monday, according to market sources. The firm is owned by the Bank of New York Mellon Corp.

The Jubilee CLO 2013-X offering sold the €231.5 million AAA-rated tranche 10 bps tighter a month ago at six-month Euribor plus 125 bps, while the €23.7 million BB-rated slice priced at six-month Euribor plus 450 bps.

Other European CLO deals in the pipeline include Ares Management LLC's €300 million Ares European CLO VI Ltd. offering, GSO Capital Partners LP's €410 million Herbert Park CLO and a €300 million European CLO from 3i Debt Management, according to informed sources.

St. Paul's CLO II prices

Intermediate Capital Group's St. Paul's CLO II offering of notes due Aug. 17, 2026 included €240 million of class A floating-rate notes (/AAA/AAA) priced at six-month Euribor plus 135 bps and €40 million of class B floating-rate notes (/AA/AA) at six-month Euribor plus 175 bps.

The CLO also sold €26 million of class C floating-rate notes (/A/A) at six-month Euribor plus 290 bps; €17 million of class D floating-rate notes (/BBB/BBB) at six-month Euribor plus 425 bps, €15 million of class E floating-rate notes (/BB+/BB+) at six-month Euribor plus 550 bps and €62 million of subordinated notes.

Lloyds TSB Bank plc arranged the deal.

Intermediate Capital Managers Ltd., a subsidiary of Intermediate Capital Group, is the CLO manager.

The notes are backed by a revolving pool of European corporate senior secured loans and bonds. The CLO fund will have about 70% of its assets at closing, Intermediate Capital Group said in a statement.

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

Jubilee CLO 2013-X closes

Alcentra sold the €400 million Jubilee CLO 2013-X offering of notes due Aug. 15, 2025 in June and the deal settled on Monday, according to a market source.

The €231.5 million of class A senior secured floating-rate notes (/AAA/AAA) priced at six-month Euribor plus 125 bps.

In the rest of the capital structure, the CLO priced €42 million of class B senior secured floating-rate notes (/AA/) at six-month Euribor plus 170 bps; €27 million of class C deferrable floating-rate notes (/A/) at six-month Euribor plus 275 bps; €21 million of class D deferrable floating-rate notes (/BBB/) at six-month Euribor plus 380 bps; €23.7 million of class E deferrable floating-rate notes (/BB/) at six-month Euribor plus 450 bps and €54.8 million of subordinated notes.

JPMorgan Securities LLC arranged the deal.

Alcentra will manage the CLO, which is collateralized primarily by a revolving pool of broadly syndicated senior secured loans and bonds.

Proceeds will be used to purchase a €391 million portfolio of European leveraged loans and bonds.

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