Five Arrows sells €307.8 million CLO; BBs ‘grind tighter’; Credit Suisse cuts CLO positions

By Cristal Cody

Eureka Springs, Ark., March 23 – March primary activity continues to rise in the European and U.S. CLO deal markets.

Five Arrows Managers LLP tapped the European primary market with a €307.8 million CLO offering.

CreekSource LLC priced $303 million of notes due April 15, 2028 in the Mill Creek CLO II, Ltd./Mill Creek CLO II LLC transaction, a source said. Goldman Sachs & Co. was the placement agent. Final pricing details were not available by press time.

“New CLO issuance keeps building momentum,” Bjarni Torfason, Deutsche Bank Securities Inc. analyst, said in a note on Wednesday.

“Last week two deals priced and this week we have already seen one deal price,” he said. “That brings March issuance to seven deals worth $2.8 billion. That is already beating February and a number of deals are being marketed. In the primary market we are seeing firming of BBB and BB levels and in the secondary market BBs have continued to grind tighter.”

BB-rated notes were quoted trading in the 850 basis points to 1,250 bps over Libor area.

In other market activity, Credit Suisse Group AG announced that it has accelerated its restructuring to stem quarterly losses, which includes exiting distressed credit and European securitized trading.

Credit Suisse chief executive officer Tidjane Thiam said in a press release that the company also cut its U.S. CLO positions to $300 million from $800 million, with gross write-downs of $64 million to date.

First-quarter trading revenue is expected to be down 40% to 45% compared to a year ago for the Zurich-based bank and financial services company.

Thiam said Credit Suisse is exiting activities not consistent with its new strategy.

“Our efforts aim at putting Credit Suisse in a position to generate capital and grow profitably in the medium and long term,” he said in the statement. “The measures we are taking to strengthen our capital base and reduce our operating costs will improve our resilience and flexibility going forward.”

Five Arrows prices CLO

Five Arrows Managers priced €307.8 million of notes due April 30, 2030 in the CLO deal, according to a market source.

Contego CLO III BV placed the €178.5 million tranche of class A senior secured floating-rate notes at Euribor plus 153 bps.

Deutsche Bank AG, London Branch arranged the deal.

The transaction is backed by senior secured obligations.

Proceeds from the offering will be used to purchase a €300 million portfolio of mostly European leveraged loans and bonds.

Five Arrows Managers is a London-based subsidiary of the Rothschild Group.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.