European CLO market ramps up with Alcentra deal; European default projections remain low

By Cristal Cody

Tupelo, Miss., Dec. 10 - Alcentra Ltd. is underway with plans to bring the firm's second European collateralized loan obligation deal of the year, a market source said.

The European market already has seen nearly €7 billion of issuance through the start of December, according to informed sources.

About €7 billion to €7.5 billion of total European CLO issuance is forecast for the year, market sources said.

NIBC Bank NV is expected to price a €304.5 million CLO before the end of the year, a source said.

Moody's Investors Service said in a report on Monday that the firm's "default projections on European corporates remain low for 2014, which bodes well for European CLOs' credit performance."

Limited supply of loan collateral and European risk retention rules, though, cast "substantial uncertainty on European CLO new issuance in 2014," Moody's said.

The European Banking Authority's proposed guidelines that will require CLO managers to retain the 5% risk retention interest in a deal could hinder smaller managers from entering the market, sources said. The European risk retention guidelines are expected to be implemented in early 2014.

Alcentra preps European CLO

Alcentra plans to price the Jubilee CLO 2013-XI BV European CLO transaction, according to a market source.

The asset management firm closed in July on the €400 million Jubilee CLO 2013-X BV offering, its first European CLO deal since 2008.

Alcentra is a subsidiary of the Bank of New York Mellon Corp.

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