Avoca prices €415 million, second European deal in August; middle market slow to recover

By Cristal Cody

Tupelo, Miss., Aug. 5 – More than €9 billion of European collateralized loan obligation deals have priced year to date following the month’s second euro-denominated offering, according to data compiled by Prospect News.

Avoca Capital Holdings sold €415 million of notes in the Avoca CLO XII Ltd. transaction via Credit Suisse Securities (Europe) Ltd., a market source said on Tuesday.

Avoca Capital priced the €240 million AAA-rated tranche at Euribor plus 134 basis points, according to the market source.

The Dublin-based credit investment management firm was acquired by KKR & Co. LP in February.

Avoca’s offering follows Intermediate Capital Group plc’s €361.4 million transaction on Friday.

London-based Intermediate Capital Group opened the month with the St. Paul’s CLO V Ltd. deal via J.P. Morgan Securities plc, a source said.

The St. Paul’s CLO V vehicle placed the AAA-rated slice at Euribor plus 134 bps.

Market analysts forecast about €10 billion to €15 billion of total European CLO issuance for 2014.

Middle-market sector

Year to date, about 124 U.S. broadly syndicated CLOs totaling $69 billion have priced, while 10 middle-market CLOs totaling $3.9 billion have been issued, Wells Fargo Securities, LLC senior analyst Dave Preston and associate analyst Jason McNeilis said in a note.

In 2013, middle-market CLO issuance was $5.4 billion, or 6.5% of the $83.1 billion priced in the U.S. market, the analysts said.

In 2012, middle-market CLO primary volume was $4.5 billion, or 8% of the annual U.S. deal total, according to the note.

“The ratio of middle-market CLOs has decreased over the past three years to 5.4% in 2014 from 8.0% in 2012,” the analysts said. “We believe this is the result of the current issuer-friendly credit environment where issuing a BSL CLO from loans obtained in the primary or secondary markets is easier than originating middle-market loans to place into a CLO. In the BSL space, there is less of a brake on supply.”

CLO middle-market managers that have brought deals over the year include BMO Asset Management Corp., NXT Capital, LLC, Golub Capital BDC, Inc., Fortress Investment Group LLC and Tennenbaum Capital Partners LLC.

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