3i sells class A notes at Euribor plus 135 bps; Onex to bring fourth CLO; spreads weak

By Cristal Cody

Tupelo, Miss., Aug. 8 - 3i Debt Management Investments Ltd. priced its long-expected first European CLO, raising €309.6 million in six tranches of senior secured floating-rate and subordinated notes due 2025 in the Harvest CLO VII Ltd., according to market sources on Thursday.

The collateralized loan obligation offering included €177 million of class A floating-rate notes (/AAA/AAA) priced at Euribor plus 135 basis points.

3i has priced two U.S. CLOs in the last year, including the $510.1 million Jamestown CLO II Ltd./Jamestown CLO II Corp. that closed in February.

In vintage 1.0 European CLOs, AAA-tranches are trading at Euribor plus 160 bps, while BBB-rated tranches are holding in the 650 bps area, a market source said on Thursday.

Post-financial crisis U.S. CLO spreads in August continue to remain wide as seen in July, with AAA-rated notes in the Libor plus 135 bps area and BBB-rated tranches at Libor plus 425 bps area, the source said.

3i prices €309.6 million

3i Debt Management's Harvest CLO VII also sold €34 million of class B floating-rate notes (/AA+/AA+) at Euribor plus 175 bps; €20 million of class C deferrable floating-rate notes (/A/A) at Euribor plus 280 bps; €13.6 million of class D deferrable floating-rate notes (/BBB/BBB+) at Euribor plus 370 bps and €23 million of class E deferrable floating-rate notes (/BB/BB) at Euribor plus 550 bps.

The deal included €42 million of subordinated notes.

Resource America Inc. and Natixis arranged the offering.

The CLO is backed primarily by European senior secured loans and senior secured bonds.

Proceeds will be used to purchase a €300 million portfolio of European leveraged loans and bonds.

Onex plans new CLO

In other market activity on Thursday, Onex Corp. said in its second-quarter earnings results that the Toronto-based private equity firm plans to bring a fourth CLO deal.

"We continue to grow our credit investing platform and are accumulating assets in a warehouse in anticipation of a fourth CLO offering," Onex said in the release. "Our credit team and platform give us the capability to place a number of offerings each year should market conditions remain attractive. Recurring management fees from CLOs and other credit products create additional value for Onex shareholders."

The company closed on the $511.1 million OCP CLO 2013-3 Ltd./OCP CLO 2013-3 Corp. transaction in March. Onex Credit Partners LLC is the CLO manager.

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