Avoca sells €310.75 million CLO in line with recent deals; U.S. AAA spreads hold at 147 bps

By Cristal Cody

Tupelo, Miss., Nov. 7 - Avoca Capital Holdings brought its €310.75 million collateralized loan obligation transaction, the firm's first deal since 2008, in line with recent euro-denominated issuance, according to market sources.

Avoca Capital CLO X Ltd. priced the AAA tranche at Euribor plus 140 basis points.

A week ago, CQS Management, Ltd. sold €202.13 million of AAA notes at Euribor plus 140 bps in the €361.57 million Grosvenor Place 2013-1 deal, sources said.

Avoca was last in the deal market with the Avoca CLO IX Ltd. offering priced in 2008.

More than €5 billion of European CLOs have priced year to date, according to informed sources.

The European CLO market is forecast to see about €6 billion of total issuance in 2013.

In the U.S. primary market, AAA spreads remain wider, sources report.

GSO/Blackstone Debt Funds Management, LLC sold the $246 million AAA tranche with a spread of Libor plus 145 bps in the $413.35 million Keuka Park CLO, Ltd. deal brought on Tuesday, according to an informed source.

CLO AAA notes priced the tightest at the start of the year at around the Libor plus 100 bps area before spreads widened to the 135 bps area in June and to around the 147 bps area currently, according to a Credit Suisse Securities (USA) LLC note.

"There is nothing on the horizon that suggests the AAA CLO spread will tighten much by the end of the year," the note said. "We expect the new-issue CLO market to remain at its current production rate - which means another $10 [billion] or so could be priced before 2013 comes to an end."

More than $67 billion of U.S. CLOs have priced year to date, sources said.

Avoca prices €310.75 million

Avoca Capital Holdings sold €310.75 million of notes due Jan. 15, 2026 in six tranches via Credit Suisse Securities (Europe) Ltd., according to market sources.

Avoca Capital CLO X priced €166 million of class A senior secured floating-rate notes (Aaa/AAA/) at Euribor plus 140 bps; €47.5 million of class B senior secured floating-rate notes (Aa2/AA/) at Euribor plus 190 bps; €14.75 million of class C senior secured deferrable floating-rate notes (A2/A/) at Euribor plus 300 bps; €20 million of class D senior secured deferrable floating-rate notes (Baa3/BBB/) at Euribor plus 390 bps; €19 million of class E senior secured deferrable floating-rate notes (Ba2/BB/) at Euribor plus 450 bps and €43.5 million of subordinated notes in the equity tranche.

Avoca Capital will manage the CLO, which is backed by a portfolio of euro-denominated broadly syndicated senior secured corporate loans and bonds.

KKR & Co. LP plans to acquire the Dublin-based European credit investment manager in a transaction set to close in the first quarter of 2014.

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