Market studies European CLO potential after GoldenTree deal; Anchorage Capital, NewMark price

By Cristal Cody

Tupelo, Miss., June 13 - Expectations for European collateralized loan obligation issuance remain unclear as the market processes new risk retention rules after GoldenTree Asset Management LP sold a €300.3 million CLO this week that did not comply with proposed regulations, according to market sources.

GoldenTree priced the deal under Article 122a but with all U.S. investors, an informed source said.

The terms for the deal were not immediately available.

The European Banking Association has proposed to revise the 5% risk retention requirement rule to require the CLO manager instead of a third-party equity investor to satisfy Article 122a. The new rule is expected to take effect on Jan. 1.

"We're all still processing that to see what the end is going to be," one CLO source said. "There still could be some more euro deals. It's too early to say, but it will probably deepen as a burgeoning market."

Earlier in June, Carlyle Group LP sold an upsized €350 million European CLO, the Carlyle Global Market Strategies Euro CLO 2013-1 BV, in its first offering in Europe since 2008.

Ares Management LLC is expected to bring the €300 million Ares European CLO VI Ltd. deal that was launched earlier in May, according to another source. Credit Suisse Group AG is the placement agent.

In the secondary market, European CLO AAA-rated tranches are trading at Libor plus 125 basis points; AA-rated notes at Libor plus 240 bps; A-rated notes at Libor plus 350 bps; BBB-rated notes at Libor plus 600 bps and BB-rated tranches at Libor plus 800 bps in June, according to a market source.

In U.S. issuance, NewMark Capital Management, LLC priced with spreads from Libor plus 94 bps to Libor plus 500 bps across the capital structure, according to an informed source.

Anchorage Capital Group, LLC sold its $412 million CLO at spreads from Libor plus 119 bps to Libor plus 550 bps.

NewMark Capital CLO prices

NewMark Capital Funding 2013-1 CLO Ltd./NewMark Capital Funding 2013-1 CLO LLC sold $421 million of notes due June 2, 2025, according to an informed source.

The CLO, managed by NewMark Capital Management, sold $80 million of class A-1 floating-rate notes (/AAA/) at Libor plus 94 bps; $165 million of class A-2 floating-rate notes (/AAA/) at Libor plus 112 bps; $10 million of 2.43% class A-3 fixed-rate notes (/AAA/); and $3 million of class A-X floating-rate notes (/AAA/) at Libor plus 110 bps.

In the other tranches, NewMark sold $50 million of class B floating-rate notes (/AA/) at Libor plus 164 bps; $28 million of class C deferrable floating-rate notes (/A/) at Libor plus 218 bps; $19 million of class D deferrable floating-rate notes (/BBB/) at Libor plus 279 bps; $19 million of class E deferrable floating-rate notes (/BB/) at Libor plus 465 bps; and $8 million of class F deferrable floating-rate notes (/B/) at Libor plus 500 bps.

The deal included $39 million of subordinated notes.

Jefferies LLC arranged the transaction.

Anchorage Capital in market

Anchorage Capital Group's previously announced $412 million CLO offering of notes due July 15, 2025 included $236 million of class A-1 senior secured floating-rate notes (Aaa//AAA) priced at Libor plus 119 bps, according to a market source.

Anchorage Capital CLO 2013-1, Ltd./Anchorage Capital CLO 2013-1, LLC also sold $47.7 million of class A-2a senior secured floating-rate notes (Aa2//) at Libor plus 175 bps; $10 million of 3.429% class A-2b senior secured fixed-rate notes (Aa2//); $20.8 million of class B senior secured deferrable floating-rate notes (A2//) at Libor plus 275 bps; $28.2 million of class C senior secured deferrable floating-rate notes (Baa3//) at Libor plus 360 bps; $25.9 million of class D secured deferrable floating-rate notes (Ba3//) at Libor plus 480 bps; $7.4 million of class E secured deferrable notes at Libor plus 550 bps and $36 million of subordinated notes.

JPMorgan Securities, LLC was the placement agent.

Proceeds from the deal will be used to purchase a leveraged loan portfolio.

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