Ares expected to bring €300 million CLO; deal flow seen steady; weakness brings out sellers

By Cristal Cody

Tupelo, Miss., June 12 - New issuance remains fairly steady in the collateralized loan obligation market, though spreads are slightly weaker on general weakness in other markets, according to informed sources on Wednesday.

"It's still quite active," one market source said. "A little weakness has brought out some sellers, more opportunities. I don't think anybody's struggling. It's slowed down a little bit just from macro conditions and stocks selling off the last couple of weeks, but it's still quite strong."

Several new deals are expected before the week ends, including Ares Management LLC's €300 million European CLO, according to a market source.

Ares European CLO VI Ltd. launched the deal earlier in May, according to another source.

Credit Suisse Group AG is the placement agent.

The Los Angeles-based asset management and investment advisement firm was last in the European market with a CLO transaction in 2007.

The deal calendar is expected to stay heavier for the rest of the month, a source said.

"We don't see any sign of a summer slowdown," the source said. "We'll be busy until the Fourth of July, and we think we'll have a strong push between now and then."

American Capital plans new CLOs

Also on Wednesday, American Capital, Ltd. said at the 2013 Morgan Stanley U.S. Financials Conference in New York that it has $230 million invested in structured products, with the majority in CLOs.

The private equity firm manages three other CLOs, including its most recently priced deal, the $414 million ACAS CLO 2013-1, Ltd./ACAS CLO 2013-1, LLC offering that closed in March.

Subsidiary American Capital Leveraged Finance Management, LLC manages the CLO.

American Capital last priced a CLO in September when ACAS CLO 2012-1 sold $362.23 million of floating-rate, fixed-rate and subordinated notes in seven tranches.

"The first one completed in '07," Malon Wilkus, chairman and chief executive officer of American Capital, said in comments before the Morgan Stanley conference. "That CLO has outperformed our original forecast, putting us in the top 5 percentile of performance in CLO management. And with that track record, we were able to raise a second CLO in the middle of last year. We're working hard to raise more CLOs."

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