CVC prices; Carlyle finds 'steady' supply of loans for CLOs; Wells Fargo ups deal forecast

By Cristal Cody

Tupelo, Miss., March 27 - CVC Credit Partners Group Ltd. priced a €450 million European collateralized loan obligation deal on Thursday that was in the pipeline since August, according to a market source.

Final pricing details for the CVC Cordatus Loan Fund III Ltd. transaction via Goldman Sachs & Co. were not available by press time.

The transaction brings the number of European CLO deals priced in 2014 to six totaling €2.51 billion, following Babson Capital Europe Ltd.'s €412.5 million Babson Euro CLO 2014-1 BV transaction on March 13, according to market sources.

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

More than $21 billion of U.S. deals have priced year to date after a slow start following the December announcement of the Volcker Rule, which will prohibit banks from owning CLO tranches that hold bonds.

On Thursday, Wells Fargo Securities, LLC analysts raised their CLO issuance forecast for 2014 to $80 billion to $90 billion from $60 billion.

"Clearly, the market thus far has adjusted to a post-Volcker world," Wells Fargo senior analyst Dave Preston and associate analyst Jason McNeilis said in a report on Thursday. "The primary market has adapted, and buyers have absorbed the supply of new-issue CLOs. We stress that we believe the large issuance total is partly due to the market's expectation that a Volcker Rule resolution is in the near future."

The market is waiting on a final version of the Volcker Rule, as well as risk retention and liquidity coverage ratio regulations.

U.S. CLO AAA-rated spreads may tighten by 5 basis points to 10 bps upon a Volcker resolution, but are likely to stay range-bound due to the large primary supply, the Wells Fargo analysts said.

CLO AAA securities remain in the Libor plus 150 bps area, according to market sources.

Carlyle closes CLOs

The Carlyle Group announced on Thursday that it closed on its two previously reported European and U.S. CLO deals that totaled $1.25 billion.

The Washington, D.C.-based asset firm priced the €375 million Carlyle Global Market Strategies Euro CLO 2014-1, Ltd. deal on Feb. 24 via Credit Suisse Securities (Europe) Ltd. and the $726.5 million Carlyle Global Market Strategies CLO 2014-1, Ltd. offering via Morgan Stanley & Co., LLC on Feb. 28.

Both deals will invest predominantly in senior secured bank loans, according to the release.

The deals were the firm's first CLO offering in each region this year. In 2013, Carlyle raised more than $3 billion in new issue CLOs, including $2.16 billion in the U.S. market from four CLOs and €685 million from two European CLOs.

"After a strong 2013, we are pleased to see continued momentum into 2014," Colin Atkins, head of European structured credit, said in the release. "In a challenging environment, our capabilities have enabled us to continue to find a steady supply of loans for our CLO products."

Carlyle's "ability to source assets and remain disciplined in our credit selection, as well as being active in the secondary loan market, has been extremely important in this extended period of demand outpacing supply," Linda Pace, head of the firm's U.S. structured credit, said in the statement.

Carlyle's structured credit/CLO business has $17.2 billion in assets under management.

Apollo top U.S. CLO manager

Apollo Credit Management (CLO) LLC is the top U.S. CLO collateral manager by assets under management with $13.51 billion of assets under management as of December, according to a Standard & Poor's report.

Apollo is followed by Highland Capital Management LP, with $12.35 billion of assets under management as of December, and CIFC Asset Management LLC, with $10.83 billion of assets under of management as of December.

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