Credit Suisse brings €413.53 million dual-currency CLO; U.S. pipeline slows; BBs tight

By Cristal Cody

Tupelo, Miss., May 21 – Credit Suisse Asset Management Ltd. tapped the market with a dual-currency collateralized loan obligation offering, according to a source on Thursday.

Credit Suisse Asset Management sold €413.53 million equivalent of dual currency notes with the AAA-rated tranches priced at Euribor/Libor plus 130 basis points.

European CLO issuance totals more than €9 billion in 13 deals year to date, with €4.6 billion priced in May, according to data compiled by Prospect News.

The U.S. market remains steady with more than $49 billion of CLOs brought year to date but is showing signs of cooling ahead of summer, according to Prospect News data and market sources.

CLO managers have priced $4.1 billion of deals so far in May, compared to $10.4 billion priced in April, according to a Wells Fargo Securities, LLC report.

“We expect to see a slowdown in issuance continue through May to possibly July, as it will take issuers longer to accumulate collateral due to a decrease in loan issuance,” Wells Fargo senior analyst Dave Preston said in the report.

Wells Fargo forecasts 2015 issuance of $90 billion.

In the secondary market, CLO AAA-rated notes have tightened 3 bps over the past month to the Libor plus 145 bps area, Preston said.

AA spreads were quoted 5 bps tighter on the month at the Libor plus 195 bps area.

BB notes have tightened 65 bps from a month ago to the Libor plus 535 bps area.

“At approximately 50 bps, the gap between AAA and AA spreads is the tightest since late 2013, when it was less than 40 bps,” Preston said. “At this point, we believe AA spreads have less room to tighten, at least until AAAs take another step tighter.”

CSAM prices €413.53 million

Credit Suisse Asset Management sold €413.53 million equivalent of dual-currency notes due July 15, 2029 in the Cadogan Square CLO VI BV deal, according to a market source.

The CLO priced €219.25 million of class A-1 floating-rate notes at Euribor plus 130 bps, £11.8 million of class A-2 floating-rate notes at Libor plus 130 bps and €5 million of 1.74% class A-3 fixed-rate notes at the top of the capital structure.

At the bottom of the capital stack, the CLO priced €9.6 million of class F-1 floating-rate notes at Euribor plus 550 bps and £506,000 of class F-2 floating-rate notes at Libor plus 550 bps.

Credit Suisse Securities (Europe) Ltd. arranged the transaction.

Proceeds from the deal will be used to purchase an equivalent €400 million portfolio of sterling-denominated or euro-denominated leveraged loans and bonds.

Credit Suisse Asset Management, a subsidiary of Zurich-based Credit Suisse AG, last priced a European CLO in the Cadogan Square series in 2013.

© 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.