St. Paul's CLO III sells €556.5 million; euro CLO prices better; U.S. AAA spreads 'sticky'

By Cristal Cody

Tupelo, Miss., Nov. 8 - Intermediate Capital Group plc priced €556.5 million of notes due Jan. 14, 2028 in the St. Paul's CLO III Ltd. deal, according to informed sources on Friday.

The offering follows Avoca Capital Holdings' €310.75 million Avoca Capital CLO X Ltd. transaction priced earlier in the week and CQS Management, Ltd.'s €361.57 million Grosvenor Place 2013-1 deal brought in the previous week.

European CLOs totaling more than €5 billion have priced year to date, market sources said.

In October, European CLO prices rallied, with AAA spreads up 1 point, according to a Morgan Stanley & Co. LLC report on Friday.

U.S. CLO primary issuance has climbed to $67.5 billion year to date in 141 broadly syndicated and middle market deals, according to another market source on Friday.

"It is worth noting that while both U.S. and European CLO new issue activity faces some challenges, such as sticky new issue AAA spread levels for U.S. CLOs, and collateral sourcing difficulty and risk retention requirement for European CLOs, the momentum of new issuance is strong," the Morgan Stanley report said. "We expect this momentum to continue into year-end, and remain constructive on the new issue activity in both U.S. and European [issuance] in 2014."

In the U.S. primary market, details emerged on newly priced transactions from THL Credit, Inc., Kramer Van Kirk Credit Strategies LP and GC Investment Management LLC.

"Thanks to a strong third quarter, new issuance of U.S. CLOs this year has now outpaced all of 2012, though the rate of new deals continues to trail off," Fitch Ratings said in a report on Friday.

During the third quarter, 27 broadly syndicated U.S. CLOs totaling $13.2 billion came to market, Fitch said.

CLO issuance totaled $17.5 billion in the first quarter and issuance totaled $15.4 billion in the second quarter, the agency said.

"While investor appetite for new CLOs remains strong, the slow drop-off may be indicative of investors already filling their 2013 allocations and waiting to adjust their allocations in the new year," Fitch senior director Derek Miller said in the release.

St. Paul's CLO III prices

Intermediate Capital Group sold €556.5 million of notes due Jan. 14, 2028 in the St. Paul's CLO III deal, which included €326.7 million of class A notes (//AAA); €64.9 million of class B notes (//AAA); €32.4 million of class C notes (//A); €26.4 million of class D notes (//BBB); €33 million of class E notes (//BB); €15.4 million of class F notes (//B-) and €57.7 million of subordinated notes.

Pricing terms were not available by press time.

J.P. Morgan Securities LLC arranged the offering.

The CLO will be managed by Intermediate Capital Managers, Ltd., a subsidiary of investment firm Intermediate Capital Group.

London-based Intermediate Capital plans to use the proceeds to purchase a €549 million portfolio of European leveraged loans and bonds.

THL raises $450.11 million

Boston-based THL Credit sold $447.11 million of notes due Jan. 18, 2026 in the THL Credit Wind River 2013-2 CLO Ltd./THL Credit Wind River 2013-2 CLO LLC offering, according to market sources.

The CLO priced $93,735,000 million of class A-1 senior secured floating-rate notes (Aaa/AAA/) at Libor plus 145 bps; $147.5 million of class A-2a senior secured floating-rate notes (Aaa/AAA/) at Libor plus 144 bps; $7,765,000 of class A-2b senior secured floating-rate notes (Aaa/AAA/) at Libor plus 164 bps and $20 million of 3.38% class A-3 senior secured fixed-rate notes (Aaa/AAA/) at the top of the structure.

The CLO also sold $25.85 million of class B-1 senior secured floating-rate notes (/AA/) at Libor plus 185 bps; $33.57 million of 4.09% class B-2 senior secured fixed-rate notes (/AA/); $30.25 million of class C secured deferrable floating-rate notes (/A/) at Libor plus 305 bps; $21.34 million of class D secured deferrable floating-rate notes (/BBB/) at Libor plus 360 bps; $18.64 million of class E secured deferrable floating-rate notes (/BB/) at Libor plus 475 bps; $6.48 million of class F secured deferrable floating-rate notes (/B/) at Libor plus 525 bps; $3 million of class M secured deferrable floating-rate notes (/B/) and $41.97 million of subordinated notes.

Deutsche Bank Securities, Inc. was the underwriter.

THL Credit Advisors LLC, the credit affiliate of private equity firm Thomas H. Lee Partners, LP, is the CLO manager.

Kramer Van Kirk taps market

Kramer Van Kirk Credit Strategies priced about $415 million of notes in the KVK CLO 2013-2 Ltd./KVK CLO 2013-2 LLC via Goldman Sachs & Co., according to the company and a market source.

The CLO sold about $253.15 million of class A floating-rate notes at Libor plus 155 bps; about $44.8 million of class B floating-rate notes at Libor plus 200 bps; about $36.4 million of class C deferrable floating-rate notes at Libor plus 285 bps; about $20.34 million of class D deferrable floating-rate notes at Libor plus 365 bps; about $17.85 million of class E deferrable notes at Libor plus 475 bps; and about $42.33 million of subordinated notes.

Kramer Van Kirk Credit Strategies, a Chicago-based credit asset management firm, will manage the CLO.

GC sells Golub CLO

GC Investment Management priced $556.15 of notes due 2025 in the Golub Capital Partners CLO 17, Ltd./Golub Capital Partners CLO 17 LLC transaction, according to a market source.

Golub Capital Partners CLO 17 sold $305 million of class A-1 senior secured floating-rate notes (Aaa/AAA/) at Libor plus 175 bps; $55 million of class A-2 senior secured floating-rate notes (Aa2) at Libor plus 240 bps; $52 million of class B senior secured deferrable floating-rate notes (A2) at Libor plus 383 bps; $23 million of class C senior secured deferrable floating-rate notes (Baa2) at Libor plus 475 bps; and $121.15 million of subordinated notes in the equity tranche.

Citigroup Global Markets Inc. was the underwriter.

GC Investment Management, an affiliate of New York-based middle market lender Golub Capital, will manage the CLO.

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