Ares Management, Intermediate Capital Group tap U.S., Europe CLO markets; AAAs stay wide

By Cristal Cody

Tupelo, Miss., March 6 - Ares Management LLC and Intermediate Capital Group plc brought new collateralized loan obligation deals in the U.S. and European markets on Thursday, according to informed sources.

Ares Management sold an upsized $513.75 million offering, with the AAA tranche priced at Libor plus 150 basis points, in line with recent issuance, according to a market source.

New issue AAA spreads in U.S. CLOs remain "wide, but refinancing of short AAA bonds and returning interest of bigger buyers could help demand for the senior tranche in months to come," according to a Deutsche Bank Securities Inc. report.

In Europe, Intermediate Capital Group upsized its St. Paul's CLO IV Ltd. offering to €435.12 million, according to an informed source.

The CLO brought the AAA tranche at Euribor plus 140 bps, in line with other European CLOs priced in 2014.

Intermediate Capital Group's deal brings total year-to-date European CLO issuance to €1.65 billion from four deals, according to market sources.

In February, 3i Debt Management Investments Ltd. priced the €425 million Harvest VIII CLO Ltd. deal and the Carlyle Group LP sold the €375 million Carlyle Global Market Strategies Euro CLO 2014-1, Ltd. transaction, while Alcentra Ltd. priced the €413.5 million Jubilee CLO 2014-XI BV offering in January.

Market analysts forecast about €10 billion to €15 billion of European CLO issuance for the year.

Ares sells $513.75 million

Ares Management sold $513.75 million of notes due April 15, 2026 in the Ares XXIX CLO Ltd./Ares XXIX CLO LLC transaction, according to a market source on Thursday.

The offering was upsized from an initial deal estimate of $411.95 million.

The CLO priced $325 million of class A-1 senior floating-rate notes (//AAA) at Libor plus 150 bps; $45 million of class A-2 floating-rate notes at Libor plus 200 bps; $33.75 million of class B floating-rate notes at Libor plus 280 bps; $27.5 million of class C floating-rate notes at Libor plus 350 bps; $29.4 million of class D floating-rate notes at Libor plus 480 bps; $4.75 million of class E floating-rate notes at Libor plus 575 bps and $48.35 million of subordinated notes.

Citigroup Global Markets Inc. arranged the deal.

Ares Management affiliate Ares CLO Management XXIX, LP is the CLO manager.

Los Angeles-based Ares Management was in the primary market in 2013 with three U.S. CLO transactions and one European CLO deal.

ICG brings €435.12 million

Intermediate Capital Group priced an upsized €435.12 million collateralized loan obligation offering in the European market, according to an informed source on Thursday.

The deal was upsized from €360 million.

In the offering, St. Paul's CLO IV priced $248.3 million of class A-1 senior secured floating-rate notes at Euribor plus 140 bps and €55.75 million of class A-2 floating-rate notes at Euribor plus 180 bps.

Lower in the capital structure, the CLO sold €23.5 million of class B floating-rate notes at Euribor plus 260 bps; €21 million of class C floating-rate notes at Euribor plus 340 bps; €29 million of class D floating-rate notes at Euribor plus 480 bps and €14 million of class E floating-rate notes at Euribor plus 600 bps.

The deal included €43.57 million of subordinated notes in the equity tranche.

Deutsche Bank AG, London Branch arranged the offering.

Intermediate Capital Managers, Ltd., a subsidiary of Intermediate Capital Group, will manage the CLO.

Intermediate Capital Group, a London-based investment firm, brought two European CLO transactions in 2013.

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