CLOs 'challenging' at AAA level; lower debt firms; NIBC restructures £620.6 million CLO

By Cristal Cody

Tupelo, Miss., Oct. 7 - CLO market participants remain busy in October with new transactions expected to price in the United States and Europe and previous deals being restructured, according to informed sources.

The CLO market so far in October is "still challenging at [the] AAA level, but lower debt had been tightening," one source said on Monday.

NIBC Bank NV announced on Monday that it restructured and closed on the £620.6 million Adriana Infrastructure CLO 2008-I BV transaction.

The bank placed the £477.8 million of class A1 senior floating-rate notes with institutional investor Aviva Investors, the global asset management arm of insurer Aviva plc.

"With this restructuring and placement, Aviva Investors and NIBC prove to be at the forefront of cooperations between banks and institutional investors for long-term financing solutions," Jeroen Drost, chief executive officer of NIBC Bank, said in the release. "This is definitely the sort of transaction and structure that we will see more and more in the future."

Kambiz Deljouie, director of ALPS at Aviva Investors, said in the release that the "credit enhanced infrastructure investment is a fit to the economics of shareholder funds in terms of optimality of risk, capital and returns."

As reported on Friday, about 25% of CLO issuance is used to refinance existing CLO notes, according to one market source.

Saratoga Investment Corp. last week refinanced the GSC Investment Corp. CLO 2007, Ltd. and sold $314.9 million of notes due Oct. 20, 2023 in the Saratoga Investment Corp. CLO 2013-1, Ltd./Saratoga Investment Corp. CLO 2013-1, Inc. deal.

Year to date about $60 billion of CLOs have priced.

Coming up in new European deals, London-based Intermediate Capital Group plc plans to bring about €500 million of notes in the St Paul's CLO III Ltd. transaction.

The European deal will price via J.P. Morgan Securities LLC, according to an informed source.

Intermediate Capital Managers Ltd., a subsidiary of Intermediate Capital Group, will manage the CLO.

NIBC restructures Adriana CLO

NIBC Bank priced £620.6 million in the Adriana Infrastructure CLO 2008-I BV deal.

The CLO sold £477.8 million tranche of class A1 senior floating-rate notes (Aaa) at six-month GBP Libor plus 120 basis points.

The deal also included about £142.6 million of class B subordinated notes, according to a market source.

NIBC was the arranger and lead manager.

The notes are due Oct. 15, 2044 and have a weighted average life of about 10 years.

The original CLO, brought in 2008, sold £571.7 million of class A1 notes, £75.2 million of class A-2 notes and £54.9 million of class B notes.

The CLO after the restructuring includes £477.8 million outstanding of class A-1 senior notes, £75.2 million outstanding of class A-2 notes and £142.6 million outstanding of class B subordinated notes.

NIBC Bank, based in The Hague, will manage the CLO. The static cash flow project finance CLO is backed by senior secured sterling loans that were originated by NIBC to United Kingdom operational public-private partnership projects.

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