GLG prices €309.2 million; CVC refinances Apidos CLO IX; Voya refinances two 2012 CLOs

By Cristal Cody

Tupelo, Miss., March 30 – European CLO issuance totals about €3 billion year to date following a €309.2 million deal from GLG Partners LP, according to a market source on Monday.

In the U.S. CLO market, refinancing activity jumped with three vintage 2012 deals priced with lower coupons, market sources said.

“Refinancing activity has picked up amidst tighter primary spreads,” BofA Merrill Lynch analysts said in a note.

All three refinanced CLOs were made compliant with Volcker risk retention regulations, the analysts said.

CVC Credit Partners, LLC refinanced $370,825,000 of notes in the Apidos CLO IX/Apidos CLO IX LLC transaction.

Voya Alternative Asset Management LLC refinanced $321.75 million of notes in the Voya CLO 2012-2, Ltd./Voya CLO 2012-2 LLC deal and $416.89 million of notes in the Voya CLO 2012-3, Ltd./Voya CLO 2012-3 LLC offering.

“According to the latest regulatory filing, all three of these CLOs have Prospect Capital (PSEC) as an equity investor,” Wells Fargo Securities, LLC senior analyst Dave Preston and associate analyst Jason McNeilis said in a note.

A total of four CLOs have been refinanced year to date.

J.P. Morgan Securities LLC analysts estimate up to 50 CLOs totaling $23 billion could refinance in 2015.

“Lower liability costs, Volckerization, and modified covenants are additional incentives as part of a refinancing, but the major reason is cost-saving: in 2015, refinanced CLOs saved an average 29 bps in weighted average liability cost,” the JPMorgan analysts said. “While Q1 has seen strong CLO supply, collateral sourcing is becoming the largest hurdle to origination in our view and to the extent that the new issue market slows from lack of collateral, participants could increase their focus on refinancing activity.”

SEC investigates fund manager

In other market activity, the Securities and Exchange Commission announced on Monday fraud charges against a New York-based investment advisor over hiding the poor performance of loan assets in three CLO funds under management.

The SEC’s Enforcement Division alleges that Lynn Tilton and her Patriarch Partners firms breached their fiduciary duties and defrauded clients by failing to value assets using the methodology described to investors in offering documents for the CLO funds collectively known as the Zohar funds.

“We allege that instead of informing their clients about the declining value of assets in the CLO funds, Tilton and her firms have consistently misled investors and collected almost $200 million in fees and other payments to which they were not entitled,” Andrew J. Ceresney, director of the SEC’s enforcement division, said in the release.

“Tilton violated her fiduciary duty to her clients when she exercised subjective discretion over valuation levels, creating a major conflict of interest that was never disclosed to them.”

More than $2.5 billion has been raised from investors for the three CLO funds, which have portfolios comprised of loans to distressed companies.

“Absent an actual overcollateralization ratio test, investors aren’t getting a true assessment of the actual values of their investments, which in reality have declined substantially,” according to the SEC release.

GLG prices €309.2 million

GLG Partners priced €309.2 million of notes due May 1, 2028 in a euro-denominated deal, according to a market source.

GLG Euro CLO I Ltd. sold €181 million of class A-1 senior secured floating-rate notes at Euribor plus 135 basis points at the top of the capital structure.

Morgan Stanley & Co. International plc was the placement agent.

GLG Partners will manage the CLO.

The notes are secured primarily by secured senior loans or senior secured bonds.

GLG Partners is an alternative asset manager based in London.

CVC refinances Apidos CLO

CVC Credit Partners refinanced $370,825,000 of notes due July 15, 2023 with tighter spreads in the vintage 2012 Apidos CLO IX/Apidos CLO IX LLC transaction, according to a market source.

The CLO priced $267,375,000 of class A senior secured floating-rate notes at Libor plus 130 bps, 10 bps better than the original pricing, at the top of the structure.

Credit Suisse Securities (USA) LLC was the refinancing agent.

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

CVC Credit Partners is the New York City-based credit management arm of private equity firm CVC Capital Partners Ltd.

Voya refinances CLOs

CLO manager Voya Alternative Asset Management priced $321.75 million of notes due Oct. 15, 2022 at par in a refinancing of the vintage Voya CLO 2012-2 offering, according to a market source.

In the senior tranche, Voya CLO 2012-2 sold $222.5 million of class A senior secured floating-rate notes at Libor plus 130 bps, tighter than where the notes originally priced at Libor plus 153 bps.

Voya Alternative Asset Management also refinanced $416.89 million of notes due Oct. 15, 2022 at par in the vintage Voya CLO 2012-3 offering.

The CLO sold $294.43 million of class A senior secured floating-rate notes at Libor plus 132 bps, 13 bps better than where the notes originally priced.

Citigroup Global Markets Inc. was the refinancing agent on both transactions.

The CLOs are backed primarily by broadly syndicated senior secured loans.

Voya Alternative Asset Management is part of New York City-based Voya Investment Management LLC.

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