CVC prices $512.7 million; Ares XXVIII CLO raises $518.5 million; deal pipeline steady

By Cristal Cody

Tupelo, Miss., Oct. 15 - Ares Management LLC and CVC Credit Partners, LLC brought new collateralized loan obligation deals, according to market sources on Tuesday.

Ares' CLO priced nine tranches of notes with spreads that ranged from Libor plus 135 basis points on the AAA-rated tranche to Libor plus 525 bps on the B slice.

CVC's Apidos CLO XV/Apidos CLO XV LLC priced with spread ranges of Libor plus 135 bps on the AAA-rated notes to Libor plus 550 bps on the B-rated tranche.

The deal pipeline is expected to stay strong through the year with $70 billion to $80 billion of total issuance projected, according to market sources.

About $61 billion of new CLOs have priced through mid-October, according to market sources.

"CLO issuance needs to average $50 billion per year to make up for vehicles that exit their reinvestment periods and begin deleveraging," Bradley Rogoff, an analyst with Barclays, said in a note. "Despite pressure on equity returns, these levels seem attainable for the next two years, ahead of risk retention regulations that are likely to go into place in 2016."

In other market activity, Fitch Ratings said in a report on Tuesday that small- to medium-sized enterprise European CLOs have seen "deteriorating asset performance since June 2012," noting that two SME CLO securitizations were partially placed with investors over the last 12 months.

"In particular, the Italian Berica PMI Srl sold the senior notes at a spread of 240 [bps] over Euribor," Fitch said. "The notes benefited from substantial credit enhancement at 43.2%. Nevertheless, the average spread on the loans of 240 [bps] was evidence that SME securitizations were still not economically viable. Hence, most banks in Italy and Spain retain SME CLOs and use them for repo funding with the ECB. The average spread on senior notes in retained transactions is around 50 [bps]."

Ares XXVIII CLO prices

In the U.S. CLO market, Ares Management affiliate Ares CLO Management XXVIII LP sold $518.5 million of notes due Oct. 17, 2024, according to market sources.

Ares XXVIII CLO Ltd./Ares XXVIII CLO LLC priced $310 million of class A senior floating-rate notes (Aaa/AAA/) at Libor plus 135 bps; $57.5 million of class B-1 senior floating-rate notes (/AA/) at Libor plus 175 bps; $10 million of 4.25% class B-2 senior fixed-rate notes (/AA/); $26 million of class C-1 mezzanine deferrable floating-rate notes (/A/) at Libor plus 275 bps; $10 million of 5.2% class C-2 mezzanine deferrable fixed-rate notes (/A/); $26 million of class D mezzanine deferrable floating-rate notes (/BBB/) at Libor plus 350 bps; $22.25 million of class E junior deferrable floating-rate notes (/BB/) at Libor plus 490 bps; $13 million of class F junior deferrable floating-rate notes (/B/) at Libor plus 525 bps and $43.75 million of subordinated notes.

Merrill, Lynch, Pierce, Fenner & Smith Inc. arranged the deal.

The issue is collateralized by broadly syndicated first-lien senior secured corporate loans.

Ares CLO Management XXVIII LP is the CLO manager.

Ares Management last priced a deal in the series with the $412.8 million Ares XXVII CLO Ltd./Ares XXVII CLO LLC transaction in July.

CVC prices Apidos CLO XV

CVC Credit Partners' deal, which is expected to close on Wednesday, included $512.7 million of notes due Oct. 20, 2025, according to market sources.

Apidos CLO XV priced $304 million of class A-1 senior secured floating-rate notes (Aaa/AAA/) at Libor plus 135 bps; $58 million of class A-2A senior secured floating-rate notes (/AA/) at Libor plus 180 bps; $10 million of 4.273% class A-2B senior secured fixed-rate notes (/AA/); $10 million of class B-1 mezzanine deferrable floating-rate notes at Libor plus 265 bps; $25 million of 5.837% class B-2 mezzanine deferrable fixed-rate notes (/A/); $28 million of class C mezzanine deferrable floating-rate notes (/BBB/) at Libor plus 325 bps; $23 million of class D mezzanine deferrable floating-rate notes (/BB/) at Libor plus 475 bps; $11 million of class E mezzanine deferrable floating-rate notes (/B/) at Libor plus 550 bps and $43.7 million of subordinated notes.

Citigroup Global Markets Inc. arranged the deal.

CVC Credit Partners, the credit management arm of London-based private equity firm CVC Capital Partners Ltd., is the CLO manager.

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