European CLO 2013 deal forecasts lowered; Carlyle firms details for €300 million offering

By Cristal Cody

Tupelo, Miss., May 29 - The European collateralized loan obligation market may see only a handful of new issuance before the Aug. 22 deadline for comments on the European Banking Association's proposal to clarify risk retention requirements for CLO managers, according to informed sources.

A couple more issuers are expected to be in the market in the next few days to weeks, including Carlyle Group LP, which firmed up details on Wednesday for a €300 million European CLO, an informed source said.

"That deal will still come to market, but it is definitely going to make everyone over there more uncertain," an informed source said. "The problem was that it was just starting to grow and this really stunts growth. It's just a proposal, but it certainly makes investors and underwriters think twice before doing a new deal now."

Either the CLO manager or a third-party sponsor currently has satisfied the 5% equity slice of a CLO transaction but the European Banking Association's new wording proposes that CLO managers retain the slice under risk retention rules.

Of the four European CLO deals sold this year, three would not qualify under the risk retention proposal, according to market sources.

Cairn Capital Ltd. reopened the market for the first time since the financial crisis with a €300.5 million offering in February.

European CLO issuance had been projected to hit about €5 billion for the year.

"We do not expect it to meet that," one source said on Thursday. "We expect it to be at a standstill where it is now. A couple more deals will come through, but until we get clarity around this proposal, we expect growth to pretty much stop."

The Carlyle Global Market Strategies Euro CLO 2013 offering, Carlyle's first European CLO since 2008, is expected to include €183 million of class A notes (/AAA/); €30 million of class B notes (/AA/); €17 million of class C notes (/A/); €13 million of class D notes (/BBB/); $21 million of class E notes (/BB/); and a €36 million equity tranche.

Barclays plc will arrange the deal.

Ares Management LLC also is expected to sell a €300 million European CLO in June in an offering arranged by Credit Suisse Securities (Europe) Ltd.

TICC 2012 CLO reopened

TICC Capital Corp. sold $44 million of class A-1 senior secured floating-rate notes (Aaa/AAA/) at Libor plus 175 basis points as part of its reopening of a CLO first priced in 2012, according to an 8-K filing with the Securities and Exchange Commission.

TICC CLO 2012-1 LLC sold $80 million total of notes due Aug. 25, 2023 in the private placement.

Guggenheim Securities, LLC was the underwriter.

Greenwich, Conn.-based TICC Capital is the manager of the CLO, which is backed by a diversified portfolio of bank loans.

Total issuance in the CLO is $320 million.

TICC plans to use the proceeds to purchase additional collateral obligations, to invest in eligible investments or to apply to payments in the indenture.

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