European primary wakes; Commerzbank, BlueMountain tap market; volume hits €2.2 billion

By Cristal Cody

Eureka Springs, Ark., March 24 – The European CLO primary market continued to see action with two more transactions priced, bringing the week’s deals to three offerings, according to market sources on Thursday.

Commerzbank AG, London Branch priced a €277.7 million short-dated CLO transaction.

BlueMountain Capital Management, LLC brought a debut €409.8 million CLO deal.

Rothschild Group affiliate Five Arrows Managers LLP was in the market as previously reported with the €307.8 million Contego CLO III BV offering on Wednesday.

About €2.2 billion of euro-denominated CLOs have priced year to date, according to Prospect News data.

Market analysts are bearish about the growth of the European CLO deal market in the near term, although the pipeline is reportedly busy.

Morgan Stanley & Co. LLC analysts lowered their 2016 issuance forecast to €10 billion from €15 billion earlier in the month.

BofA Merrill Lynch forecasts €15 billion of CLO volume for the year.

Commerzbank sells CLO

Commerzbank priced €277.7 million of notes due Oct. 25, 2025 in a CLO offering via Stifel, Nicolaus & Co., Inc., according to a market source.

Bosphorus CLO II Designated Activity Co. sold €163.6 million of class A floating-rate notes at Euribor plus 143 basis points in the senior tranche.

Commerzbank AG Debt Fund Management, a fund management business of Commerzbank AG, London Branch, will manage the CLO.

The CLO is fully ramped up and backed by broadly syndicated senior secured loans and bonds.

Proceeds from the deal will be used to purchase a €275 million portfolio of European leveraged loans and bonds.

Commerzbank was last in the primary market on Feb. 6, 2014 with the €233.4 million Bosphorus CLO I Ltd. offering.

The London-based CLO manager is a subsidiary of global banking and financial services company Commerzbank AG.

BlueMountain prices

BlueMountain Fuji Management, LLC priced €409.8 million of notes due April 25, 2030 in the new deal, according to a market source.

BlueMountain EUR CLO 2016-1 Designated Activity Co. sold €212.4 million of class A-1 senior secured floating-rate notes at Euribor plus 155 bps and €20 million of 1.63% class A-2 senior secured fixed-rate notes at the top of the capital structure.

J.P. Morgan Securities plc arranged the deal.

BlueMountain Fuji, an affiliate of BlueMountain Capital Management, will manage the CLO.

The deal is backed by euro-denominated broadly syndicated senior secured loans and bonds.

BlueMountain Capital Management brought four U.S. CLO transactions to market in 2015.

The management firm is based in New York City.

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