Invesco preps $414.75 million North End CLO; QE shrugged off; CLOs 'not rate-sensitive'

By Cristal Cody

Tupelo, Miss., June 19 - Treasury yields climbed in a sell-off following the Federal Reserve's plan to continue to purchase $85 billion of assets each month and possible tapering of the program before the year ends, though the impact to CLOs is not expected to be significant, according to market sources.

"It's not really going to impact the new issue calendar that much," one source said. "We still expect to see the market pretty active in the near-term."

Federal Reserve chairman Ben Bernanke said in a press conference after the FOMC's rate decision that the quantitative easing program, which is used to pressure longer-term interest rates, may be tapered later this year as economic conditions improve.

"We're not rate-sensitive," another CLO market source said on Wednesday. "The most connected we would be would be in terms of sentiment - bullish or bearish. We're so close to the short end it's not had that much of an effect."

Coming up in new issuance, Invesco Senior Secured Management, Inc. is preparing to bring its first collateralized loan obligation in 2013 with the $414.75 million North End CLO, LLC/North End CLO, Ltd. deal, according to market sources.

The asset manager's last CLO transaction was the $452,382,000 Marea CLO, Ltd., which closed in September.

Invesco manages 17 CLOs with assets of $6 billion.

Invesco plans North End CLO

Invesco expects to price seven tranches of notes due July 17, 2025 in the North End CLO, according to a market source.

The deal includes $246.5 million of class A secured floating-rate notes (Aaa); $56 million of class B secured floating-rate notes; $29.5 million of class C secured deferrable floating-rate notes; $21 million of class D secured deferrable floating-rate notes; $18 million of class E secured deferrable floating-rate notes; $10 million of class F secured deferrable floating-rate notes and $33.75 million of subordinated notes.

Merrill Lynch, Pierce, Fenner & Smith Inc. is the underwriter.

Invesco Senior Secured Management, a subsidiary of Atlanta-based Invesco Ltd., will manage the cash-flow CLO.

The deal is expected to close on July 11.

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