GC Investment plans $502.5 million CLO; Halcyon closes; Citigroup top deal arranger

By Cristal Cody

Tupelo, Miss., July 11 - A new collateralized loan obligation offering is on the way from GC Investment Management LLC, which plans to sell $502.5 million of notes, according to market sources.

Although deal action is slowing as expected for the summer months, CLO issuance remains on track for a dramatic year, according to a report on Thursday from the Appleby law firm.

A total of 98 CLOs closed in the first half of 2013, compared to 39 deals that closed in the same six months in 2012, the report said.

About $47 billion of CLO deals have priced through the first half of the year.

"For the remainder of the year, we expect to see the re-emergence of other asset classes," Julian Black, Appleby's global head of structured finance, said in a statement. "In particular, we are seeing commercial real estate CLOs re-emerging, and we expect to see this area as a growth sector going forward."

In the first six months of the year, the top 10 deals by amount increased by an average deal size of $40 million over the second half of 2012. The average deal size for CLOs sold over the first six months was $482 million, according to the report.

Citigroup Global Markets Inc. is leading the ranking of arrangers in the CLO market over the first two quarters of 2013 with 20 deals valued at $9.5 billion, according to the report.

Citigroup is followed by Bank of America Merrill Lynch with $6.5 billion of deals; Morgan Stanley & Co. LLC with $6.1 billion of new issuance; Wells Fargo Securities LLC with $4 billion of new CLOs and RBS Securities Inc. with $3.6 billion of deals.

Japanese banks and U.S. pension funds are typically investing in the AAA tranches, Appleby's said.

AAA-rated spreads have narrowed from Libor plus 140 bps at the end of 2012 to the Libor plus 115 bps area in the second quarter of 2013.

GC Investment joins calendar

GC Investment Management's $502.5 million CLO includes four tranches of notes due July 22, 2024, according to market sources.

The Golub Capital Partners CLO 16, Ltd. deal will offer $275 million of class A senior secured floating-rate notes (Aaa); $50 million of class B senior secured floating-rate notes (Aa2); $45 million of class C mezzanine secured deferrable floating-rate notes (A2) and $132.5 million of subordinated notes.

Wells Fargo Securities, LLC is the underwriter.

The CLO has a three-year reinvestment period.

The notes are backed by small and medium enterprise and broadly syndicated loans.

The deal is expected to close on Aug. 6.

Halcyon closes

Halcyon Loan Advisors Funding 2013-2 Ltd./ Halcyon Loan Advisors Funding 2013-2 LLC closed on its $465.5 million CLO offering on Thursday, according to an informed source.

Halcyon priced $3 million of class X senior secured floating-rate notes due July 8, 2016 (Aaa/AAA/) at Libor plus 100 basis points; $254 million of class A senior secured floating-rate notes due July 8, 2025 (Aaa/AAA/) at Libor plus 120 bps; $46 million of class B-1 senior secured floating-rate notes due July 8, 2025 (Aa2) at Libor plus 175 bps; $42 million of 4.15% class B-2 senior secured fixed-rate notes due July 8, 2025 (Aa2); $27.5 million of class C mezzanine secured deferrable floating-rate notes due July 8, 2025 (A2) at Libor plus 270 bps; $26.75 million of class D mezzanine secured deferrable floating-rate notes due July 8, 2025 (Baa3) at Libor plus 380 bps; $22.25 million of class E junior secured deferrable floating-rate notes due July 8, 2025 (Ba3) at Libor plus 575 bps and $44 million of subordinated notes due July 8, 2025.

Morgan Stanley & Co., LLC was the placement agent.

Halcyon Loan Advisors 2013-2 LLC, a subsidiary of Halcyon Loan Advisors LP, will manage the CLO.

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