Blackstone/GSO prices €418.65 million CLO reset; Investcorp in primary; spreads soften

By Cristal Cody

Tupelo, Miss., Oct. 15 – Blackstone/GSO Debt Funds Management Europe Ltd. priced €418.65 million of notes in a second refinancing of a 2014 vintage euro-denominated CLO.

Also, Investcorp Credit Management EU Ltd. was expected to price about €410 million of notes in the new Harvest CLO XX DAC transaction via J.P. Morgan Securities plc on Friday, according to market sources. Final pricing details were not immediately available.

The deal is the second new offering of the year for the CLO manager, a subsidiary of Bahrain-based Investcorp Bank BSC.

Major changes to the European Union’s securitization rules that take effect in January 2019 could impact the market in the year ahead, BofA Merrill Lynch analysts said in a note released on Monday.

Beginning in January, all E.U. institutional investors and all issuers will be subject to the E.U. securitization regulation that was adopted in December 2017, according to the note.

“In other words, any securitization issued anywhere in the world must meet the E.U. general requirements for securitization to be investible by E.U. institutional investors or by non-E.U. based investors on behalf of E.U. institutional investors,” the analysts said.

“The initial feedback we are receiving from market participants is that the majority of non-E.U. originated transactions issued after 1/1/19 will not meet the E.U. securitization regulation requirements if they follow the current practices, and as such will not be accessible to E.U. based investors or on behalf of EU based investors,” the analysts said. “That includes U.S., Australian and other third country securitizations.”

More than €23 billion of new European CLOs have priced year to date.

Supply was light in both the European and U.S. primary markets over the past holiday-shortened week, according to the note.

More than $7 billion of new CLOs have priced in September, bringing year-to-date U.S. issuance to more than $98 billion and on track to hit the firm’s forecast of $120 billion of new supply for the year, the analysts said.

Looking ahead, U.S. CLO supply is forecast to decline in 2019 to $105 billion of new issuance and $100 billion of refinancing volume, according to the note.

About $160 billion to $170 billion of refinancing volume is expected this year.

In the secondary market, spreads softened in both the European and U.S. markets over the past week, according to the note.

Euro CLO spreads eased about 2 basis points to 15 bps across the capital stack, while U.S. CLO spreads headed out on Friday an average 2 bps to 25 bps wider on the week.

Blackstone/GSO refinances

Blackstone/GSO Debt Funds Management Europe priced €418.65 million of notes in a refinancing of the 2014 vintage Phoenix Park CLO Ltd./Phoenix Park CLO LLC transaction, according to a market source.

The CLO sold €1.6 million of class X senior secured floating-rate notes at Euribor plus 50 bps and €240 million of class A-1A senior secured floating-rate notes at Euribor plus 96.5 bps at the top of the capital stack.

BNP Paribas, London Branch was the refinancing agent.

The maturity on the notes was extended to Oct. 29, 2031 from the original July 29, 2027 maturity.

Phoenix Park CLO originally was issued on July 24, 2014.

In the first refinancing on Jan. 19, 2017, the CLO sold €236 million of class A-1-R senior secured floating-rate notes at Euribor plus 110 bps.

Proceeds from the offering will be used to redeem the original and first refinanced notes.

The CLO is backed primarily by broadly syndicated senior secured corporate loans or senior secured bonds.

Dublin-based Blackstone/GSO Debt Funds Management Europe is a subsidiary of asset manager GSO Capital Partners LP.

© 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.