Babson prices €412.5 million CLO; Blackstone/GSO eyes euro deal; European AAA spreads flat

By Cristal Cody

Tupelo, Miss., March 18 - Babson Capital Europe Ltd. brought a €412.5 million collateralized loan obligation offering in the second European CLO deal of the month, according to an informed source on Tuesday.

Babson Capital Europe sold €201.25 million of notes in the class A-1 tranche at Euribor plus 140 basis points, in line with other European CLO AAA securities priced in 2014, a source said.

Intermediate Capital Group plc placed the AAA-rated tranche in the €435.12 million St. Paul's CLO IV Ltd. deal on March 6 also at Euribor plus 140 bps, according to an informed source.

Babson Capital Europe priced the AAA-rated tranche about 10 bps better than most of the class A CLO securities brought in the U.S. market this year, according to informed sources.

"Most market participants are well aware that CLO new issue AAA spreads are wider in the U.S. relative to year-ago levels," Barclays analysts said in a note. "In contrast, European AAA spreads are close to flat over the past year, as there have been no material regulatory changes during that time."

Babson's deal brings total year-to-date European CLO issuance to €2.06 billion from five transactions, according to market sources.

About €10 billion to €15 billion of European CLO issuance is forecast for the year.

Coming up in the European primary market, Blackstone/GSO Debt Funds Management Europe Ltd. is marketing a new CLO deal sized at about €412 million, according to an informed source.

Babson prices €412.5 million

Babson Capital Europe raised €413.55 million in the Babson Euro CLO 2014-1 BV offering via BofA Merrill Lynch, according to an informed source.

Babson Euro CLO 2014-1 priced €201.25 million of class A-1 senior secured floating-rate notes (Aaa//AAA) at Euribor plus 140 bps and €30 million of 2.41% class A-2 senior secured fixed-rate notes (Aaa//AAA) at the top of the structure.

The CLO also sold €20.5 million of class B-1 senior secured floating-rate notes (Aa2//AA) at Euribor plus 200 bps; €30 million of 3.23% class B-2 senior secured fixed-rate notes (Aa2//AA); €22.5 million of class C senior secured deferrable floating-rate notes (A2//A) at Euribor plus 265 bps; €19 million of class D senior secured deferrable floating-rate notes (Baa2//BBB) at Euribor plus 340 bps; €31 million of class E senior secured deferrable floating-rate notes (Ba2//BB) at Euribor plus 460 bps; €14.5 million of class F senior secured deferrable floating-rate notes (B2//B-) at Euribor plus 560 bps and €43.75 million of subordinated notes in the equity tranche.

Babson Capital Europe, a subsidiary of U.S.-based Babson Capital Management LLC, will manage the CLO, which is backed primarily by euro-denominated senior secured obligations.

The notes are due April 15, 2027.

Babson Capital Europe, a London-based sub-investment-grade credit fund management firm, plans to use the proceeds from the deal to purchase a €400 million portfolio of European leveraged loans and bonds.

Blackstone/GSO preps CLO

Blackstone/GSO Debt Funds Management Europe is expected to offer about €412 million of notes in the Holland Park CLO transaction, according to an informed source.

BNP Paribas Securities Corp. is the placement agent.

Blackstone/GSO Debt Funds Management Europe will manage the CLO.

The Dublin-based unit of the Blackstone Group LP brought three European CLOs in 2013 that included the €403.35 million Grand Harbour I BV deal, the €413.2 million Herbert Park BV offering and the €615.69 million Richmond Park CLO Ltd. transaction.f

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