CIFC, KVK prep CLOs; Carlyle 'developing' €300 million CLO; Morgan Stanley cuts forecast

By Cristal Cody

Tupelo, Miss., Feb. 5 - CLO issuance is on the rise with deals expected to price soon in the U.S. and European markets, according to informed sources.

CIFC Asset Management LLC plans to be in the market over the week with a $621.9 million CLO transaction, according to an informed source.

Also coming up, Kramer Van Kirk Credit Strategies LP intends to offer a $413.2 million CLO, a market source said.

In the European CLO market, the Carlyle Group LP's €300 million Carlyle Global Market Strategies Euro CLO 2014-1, Ltd. deal "is developing," an informed source said.

The slow start, though, to primary action in 2014 caused Morgan Stanley & Co. LLC analysts Vishwanath Tirupattur and Mia Qian to cut their annual deal forecast on Wednesday.

January saw five CLOs totaling $2.55 billion price, compared to 17 transactions that totaled $9.04 billion in January 2013, according to the analysts.

Issuance slowed following the Dec. 10 announcement of the Volcker Rule, which prohibits banks from owning CLOs that hold covered funds. Agency groups have sought federal clarification, but an interim final rule issued on Jan. 14 did not address bank ownership of CLOs that hold bonds.

"The CLO new-issue market may remain sluggish until there is regulatory/legislative relief from Volcker for existing holdings of CLO tranches for banks - or until clarity emerges about the way forward for resolving Volcker compliance," the analysts said. "Consequently, CLO issuance for 2014 is likely to be lower than we previously projected. We now forecast $55-$65 billion in CLO issuance in 2014, down from our original forecast of $65-$75 billion."

New issue AAA tranches remain "stubbornly sticky" in the Libor plus 150 basis points to 160 bps range, while new issue BB notes have tightened 30 bps to 40 bps to the Libor plus 560 bps to 570 bps area, the report said.

CIFC preps $621.9 million CLO

CIFC Asset Management expects to price $621.9 million of notes due April 18, 2025 in the CIFC Funding 2014 Ltd./CIFC Funding 2014 LLC deal, according to an informed source.

The CLO transaction includes $372.25 million of class A floating-rate notes (Aaa/AAA/); $52.75 million of class B-1 floating-rate notes (Aa2); $20 million of class B-2 fixed-rate notes (Aa2); $47.5 million of class C deferrable floating-rate notes (A2); $31.75 million of class D deferrable floating-rate notes (Baa3); $30 million of class E deferrable floating-rate notes (Ba3); $14.25 million of class F deferrable floating-rate notes (B2) and $53.4 million of subordinated notes.

Credit Suisse Securities (USA) LLC is the placement agent.

CIFC Asset Management will manage the CLO.

CIFC Asset Management brought four U.S. CLOs in 2013. The firm priced the $516.6 million CIFC Funding 2013-I, Ltd. deal, the $649.65 million CIFC Funding 2013-II, Ltd. offering, the $418 million CIFC Funding 2013-III, Ltd. transaction and the $522.5 million CIFC Funding 2013-IV Ltd. vehicle.

The New York City-based investment advisor is a subsidiary of CIFC Corp.

KVK to sell $413.2 million

Kramer Van Kirk Credit Strategies intends to price $413.2 million of notes due April 2026 in the KVK CLO 2014-1 Ltd./KVK CLO 2014-1 LLC offering, according to a market source.

The deal includes $249.2 million of class A floating-rate notes (/AAA/); $47.6 million of class B floating-rate notes (/AA/); $34.4 million of class C deferrable floating-rate notes (/A/); $21.6 million of class D deferrable floating-rate notes (/BBB/); $19.2 million of class E deferrable floating-rate notes (/BB/); $4.8 million of class F deferrable floating-rate notes (/B/) and $36.4 million of subordinated notes.

Goldman Sachs & Co. will arrange the transaction.

Kramer Van Kirk Credit Strategies will manage the CLO.

The deal is expected to close on March 15.

The Chicago-based credit asset management firm priced two CLOs in 2013, including the $570.01 million KVK CLO 2013-1 Ltd./KVK CLO 2013-1 LLC deal in January 2013 and the $415 million KVK CLO 2013-2 Ltd./KVK CLO 2013-2 LLC offering in October.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.