Rockford Tower prices €407 million; European CLO volume to date outpaces 2017 supply

By Cristal Cody

Tupelo, Miss., Oct. 25 – Rockford Tower Capital Management, LLC priced a new €407 million European CLO offering.

The CLO manager sold the AAA tranche at Euribor plus 103 basis points.

Also in the primary market, Five Arrows Managers LLP priced the €412 million Contego CLO VI DAC deal, a source said. Merrill Lynch International was the placement agent. The deal is expected to close on Dec. 3. Final pricing details were not immediately available.

Fitch Ratings said in a news release on Thursday that U.S. and European CLO new issue spreads gained, while European deal activity hit a high in the third quarter.

“New issue-stated spreads on CLO notes logged consecutive quarter-on-quarter increases in the third quarter of 2018 in both the U.S. and Europe, both for the first time since first quarter 2016,” according to the Fitch news release.

European CLO AAA notes averaged a spread of Euribor plus 91.6 basis points in the third quarter, compared to 80.5 bps in the second quarter and 72.5 bps in the first quarter.

U.S. CLO AAA spreads averaged 115 bps over Libor in the third quarter, up from 106 bps in the second quarter and 100 bps in the first quarter, the release said.

European CLO deal volume also has increased over the year.

In the third quarter, 18 European CLOs issued €7.5 billion of notes and equity, compared with 17 CLOs and €7.1 billion of issuance in the second quarter.

“Year-to-date issuance reached €20.8 billion from 50 transactions compared to €20.1 billion and 49 transactions for the full year 2017,” Fitch said. “This is in addition to 15 transactions that were refinanced, reset or reissued during the quarter.”

Rockford Tower brings deal

Rockford Tower Capital Management priced €407 million of notes due Dec. 20, 2031 in the transaction, according to a market source.

Rockford Tower Europe CLO 2018-1 DAC sold €218 million of class A-1 floating-rate notes at Euribor plus 103 bps in the senior tranche.

Citigroup Global Markets Ltd. was the placement agent.

Rockford Tower Capital Management is a collateral manager for Rockford Tower CLOs and a relying advisor for King Street Capital Management, LP. The CLO manager has offices in New York, London, Singapore, Tokyo and Charlottesville, Va.

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