Oaktree prices €414.35 million CLO; Prudential plans deal; strong supply ahead for Europe

By Cristal Cody

Tupelo, Miss., Jan. 26 – Oaktree Capital Management (UK) LLP/Oaktree Capital Management (Europe) LLP returned to the European CLO primary market for the first time since 2014 with a €414.35 million deal, according to a market source.

Coming up in near-term pricing action, Prudential Investment Management, Inc. plans to bring a $507.75 million CLO.

Primary action in the first quarter in the U.S. market is expected to be slow, while supply should be strong in the European space, according to a January CLO report from Moody’s Investors Service.

“We expect the Q1 2016 issuance to remain slow because of current volatile market conditions,” Moody’s said. “European CLO issuance also declined in Q4, hitting the lowest quarterly total since Q3 2013. Despite this slow down, we expect strong issuance in Q1 2016 as given the current solid pipeline.”

Oaktree brings Arbour CLO III

Oaktree Capital Management (UK)/Oaktree Capital Management (Europe) priced €414.35 million of notes due March 15, 2029 in the Arbour CLO III Ltd. deal, according to a market source.

Arbour CLO III sold €230 million of class A-1 senior secured floating-rate notes at Euribor plus 145 basis points and €10 million of 1.688% class A-2 senior secured fixed-rate notes at the top of the capital structure.

Citigroup Global Markets Ltd. arranged the offering.

Oaktree Capital Management (UK)/Oaktree Capital Management (Europe) will manage the CLO.

The CLO is backed by first-lien senior secured obligations and eligible investments.

Proceeds from the deal will be used to purchase a €400 million portfolio of European leveraged loans and bonds.

Oaktree Capital Management was last in the European CLO primary market on Dec. 15, 2014 with the €375.1 million Arbour CLO II Ltd. transaction.

London-based Oaktree Capital Management (UK) is an affiliate of Los Angeles-based Oaktree Capital Management, LP.

Prudential markets CLO

Prudential Investment Management is in the deal pipeline with $507.75 million of notes due April 15, 2027 in a CLO offering via BNP Paribas Securities Corp., according to a market source.

The Dryden 42 Senior Loan Fund/Dryden 42 Senior Loan Fund LLC transaction includes $310 million of class A floating-rate notes (AAA); $60 million of class B floating-rate notes (AA); $37.5 million of class C deferrable floating-rate notes (A); $27.5 million of class D deferrable floating-rate notes (BBB); $24 million of class E deferrable floating-rate notes (BB) and $48.75 million of subordinated notes.

Prudential Financial Inc. subsidiary PGIM Inc. will manage the CLO.

The CLO has a non-call period that ends on April 15, 2018. The reinvestment period ends on Oct. 15, 2020.

The deal is backed primarily by broadly syndicated senior secured loans.

Prudential Investment Management was in the U.S. primary market with four CLO deals in 2015.

The primary asset management business of Newark, N.J.-based Prudential Financial priced three U.S. CLO transactions in 2014.

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