Primary action forecast; CIFC preps $563.1 million CLO; Europe CLO oil exposure minimal

By Cristal Cody

Tupelo, Miss., Feb. 13 – Primary action in the collateralized loan obligation market is expected to remain steady in February with new deals in the pipeline in the U.S. and European markets, sources said.

CIFC Asset Management LLC plans to bring a $563,125,000 transaction.

New euro-denominated issuance is anticipated in the near-term following deals from Carlyle Group LP and Commerzbank AG, London Branch.

The European CLO market has been mostly insulated from volatility in the energy sector, according to BofA Merrill Lynch.

“European CLOs have very little exposure to the energy sector, explaining the limited impact so far on the market of the sharp falls in oil prices in recent months,” BofA Merrill Lynch analysts said in a note. “In contrast, deals with high energy exposure in the U.S. have seen some weakness in the secondary market in recent weeks.”

The largest industry exposure European CLOs have is to the communications sector, the analysts said.

European 2.0 CLOs have an industry exposure to the energy sector of about 0.7%, compared to 17.9% in the communications sector.

The average exposure in U.S. CLOs brought in 2014 is about 4.7%, according to BofA Merrill Lynch.

CIFC to price $563.1 million

CIFC Asset Management plans to price $563,125,000 of notes due 2027 in a CLO transaction via BNP Paribas Securities Corp., according to a market source.

The CIFC Funding 2015-I, Ltd./CIFC Funding 2015-I, LLC deal includes $357.5 million of class A floating-rate notes (//AAA); $60.5 million of class B floating-rate notes; $29.7 million of class C floating-rate notes; $33.55 million of class D floating-rate notes; $24.75 million of class E floating-rate notes; $9,625,0000 of class F floating-rate notes and $47.5 million of subordinated notes.

CIFC Asset Management will manage the CLO, which has a 1.5-year non-call period and a four-year reinvestment period.

The portfolio is backed primarily by broadly syndicated first-lien senior secured loans.

Proceeds from the deal will be used to purchase a portfolio of about $550 million of mainly senior secured leveraged loans.

CIFC Funding refinanced $290.3 million of notes in the CIFC Funding 2011-I, Ltd./CIFC Funding 2011-I, LLC vehicle on Jan. 9.

The New York City-based asset management firm is a subsidiary of CIFC Corp.

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