Investcorp prices €417.25 million CLO; middle-market, broadly syndicated AAA gap firms

By Cristal Cody

Tupelo, Miss., Oct. 3 – Investcorp Credit Management EU Ltd. priced €417.25 million of notes in a refinancing and reset of a 2015 CLO transaction.

About €30 billion of new, refinanced and reset euro-denominated CLOs have priced year to date, according to market sources.

In other activity, price tiering among managers in the U.S. primary market has lessened over the year even with the addition of nine new managers, Wells Fargo Securities LLC analysts said in a note on Tuesday.

“Tiering in U.S. BSL CLOs, especially in the AAA tranches, has greatly decreased since spring/early summer,” the analysts said.

For example, the analysts noted that “in late March 2017, Wellfleet [Credit Partners, LLC] priced their AAAs 9 [basis points] wide of Neuberger Berman [Investment Advisers LLC’s] AAAs; in August, the gap between Wellfleet’s AAAs and BlueMountain [Capital Management LLC]’s AAAs was only 5 bps.”

Also, “Zais [Group, LLC] printed AAAs 16 bps wide of Voya [Alternative Asset Management LLC]’s AAAs in May, but in September Zais’ AAAs were only 9 bps wide of PGIM [Inc.]’s AAAs,” the analysts said.

In addition, the gap between U.S. CLO middle market AAA spreads and broadly syndicated CLO AAA spreads has tightened to about 35 bps, down from 55 bps-65 bps in the first quarter, according to the note.

“The last time the MM CLO-BSL CLO AAA basis was this tight was in H1 2015,” the analysts said.

Investcorp refinances XII

Investcorp Credit Management EU priced €417.25 million of notes in a refinancing and reset of the Harvest CLO XII DAC deal, according to market sources and a notice to noteholders on Monday.

Harvest CLO XII sold €239 million of class A-R senior secured floating-rate notes at par to yield Euribor plus 87 bps at the top of the capital structure.

Merrill Lynch International was the refinancing placement agent.

Investcorp Credit Management EU, formerly known as 3i Debt Management Investments Ltd., will manage the CLO.

The maturity on the refinanced notes was extended to Oct. 25, 2030 from the original Aug. 18, 2028 maturity.

In the original €413 million transaction that closed on Aug. 6, 2015, the CLO sold €229.75 million of class A-1 floating-rate notes at Euribor plus 134 bps.

Proceeds will be used to redeem the original notes.

The refinanced notes are collateralized primarily by senior secured loans and senior secured bonds.

Investcorp Credit Management EU is a subsidiary of Bahrain-based Investcorp Bank BSC.

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