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Octagon prices $713.4M CLO via Citi

Citi today priced a $713.4 million CLO for Octagon Credit Investors, according to market sources.

The deal is the asset manager’s fourth deal to price this year, and is structured as follows:

The deal has a stated maturity date of December 2024, and its reinvestment period ends on Nov. 16, 2017.

With Octagon’s deal, CLO issuance in the year to date rises to $74.48 billion across 154 deals. Month-to-date issuance stands at $9.52 billion from 19 deals, making November the second busiest month in terms of volume behind March ($10.74 billion). – Sarah Husband

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CLO issuance surges as investors eye year-end

weekly CLO issuance

CLO issuance has surged of late as loan managers look to close out warehouses before year-end. The most recent deal: Octagon this morning priced a $713 million vehicle, the largest CLO since October.

With Octagon, CLO issuance  year to date rises to $74.48 billion across 154 deals. Month-to-date issuance stands at $9.52 billion from 19 deals, making November the second-busiest month in terms of volume behind March ($10.74 billion), according to LCD’s Sarah Husband.

Monthly CLO issuance

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ING prices $518.2M CLO via Credit Suisse

Credit Suisse today priced a $518.2 million CLO for ING Alternative Asset Management, according to market sources.

The deal is the manager’s third to price this year, and is structured as follows:

The deal has a final maturity of Jan. 18, 2026.

With ING’ deal, CLO issuance in the year to date rises to $73.77 billion across 153 deals. Month-to-date issuance stands at $8.81 billion from 18 deals. – Sarah Husband

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S&P report: Midsize UK firms seek new funding sources

imagesMore information about the financial performance of U.K. midsize companies could help in the development of capital market funding for this sector, says Standard & Poor’s Ratings Services in a new report titled “Midsize U.K. Companies Seek New Funding Sources To Unlock Growth.

As the U.K. economy starts to recover, U.K. mid-market companies – which S&P defines as firms with revenue of between €100 million and €1.5 billion (between £85 million and £1.3 billion) – face a contraction in bank lending, potentially limiting their opportunity to grow and develop. While alternative sources of funding are available, potential investors are, in the agency’s view, being held back by a lack of transparency on mid-market companies.

S&P has analyzed an overall dataset of non-financial parent companies operating in the U.K., for which it found more than 30,000 listed and unlisted companies tracked by S&P Capital IQ.

“The results from this group show that, for the past seven years, profit margins are on average 1.7 times lower for U.K. mid-market companies compared with their larger peers, although they are less volatile,” said Standard & Poor’s research analyst Taron Wade. “Our study also found that U.K. midsize companies consistently maintain higher cash and short-term investments to total assets than their large and small peers, and maintain more conservative financial leverage ratios than large U.K. companies.”

In general, the sector-by-sector breakdown of U.K. mid-market companies mirrors the larger market, with the majority of firms operating in the consumer discretionary (ie., non-essential goods and services such as retail, media, and autos) and broad industrial sectors. Exposure to these sectors should help U.K. mid-market firms to benefit from the economic turnaround.

According to S&P’s economic research, the largest contribution to GDP growth on the output side of the economy in the third quarter of this year came from the services sector, which increased by 0.7% quarter-on-quarter. Consumer spending is likely to contribute the most to economic growth in the coming two years, and the agency estimates private demand will rise by 2.3% in 2014 and 2015, supported by improved confidence, rising employment, and an improving housing market – all of which should boost consumption and reduce the savings rate.

Mid-market companies in the U.K. are ten times greater in number than their larger peers in the country, and generated roughly a quarter of total sales for U.K. firms in 2012. However, while mid-market companies contribute a great deal to the local economy, they are more sensitive to the contraction of bank lending than their larger peers. And even though the U.K. private placement market is growing – with an estimated £6 billion raised in the past three years – in S&P’s view it lacks transparency in terms of transaction flow, and there are barriers to further development, including regulation. – Staff reports

The report is available to subscribers of RatingsDirect at www.globalcreditportal.com and at www.spcapitaliq.com. If you are not a RatingsDirect subscriber, you may purchase a copy of the report by calling (1) 212-438-7280 or sending an e-mail to [email protected]

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Intelsat $3.1B refi B-2 leveraged loan enters secondary above par

lrg_logo_intelsatThe $3.1 billion B-2 term loan for Intelsat Jackson broke for trading late this afternoon at 100.125/100.625, from issuance at par, according to sources. The loan due June 2019 is priced at L+275, with a 1% LIBOR floor. Bank of America Merrill Lynch, Credit Suisse, J.P. Morgan, and Morgan Stanley arranged the loan, which cleared in line with talk, but was upsized from an initial $1.75 billion, with the additional proceeds earmarked to repay nearly all of the $3.22 billion TLB due 2018. Via the refinancing, the issuer is extending its term loan maturity from April 2018 and reducing pricing from L+300, with a 1.25% floor. Alongside the term loan, the company is also putting in place a $500 million revolver maturing in July 2017, which is priced at L+275. Publicly traded Intelsat is a provider of fixed satellite services worldwide.

Terms:

Borrower Intelsat Jackson
Issue $3.1 billion TLB-2
UoP Refinancing/repricing
Spread L+275
LIBOR floor 1.00%
Price 100
Tenor/maturity June 2019
YTM 3.80%
Call protection six months 101 soft call
Corporate ratings B/B3
Facility ratings BB-/Ba3
S&P recovery rating 1
Financial covenants net-secured-leverage, interest coverage
Arrangers/bookrunners BAML, CS, JPM, MS
Admin agent BAML
Notes Upsized from $1.75B
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Leveraged loan issuers’ earnings growth gains in 3Q from 4-yr low

 

Leveraged loan issuers posted a small, sequential increase in cash-flow growth during the third quarter. On average, EBITDA growth among S&P/LSTA Index issuers that file publicly inched to 6.8% from a four-year low of 6.1% in the second quarter, according to S&P Capital IQ. As this chart illustrates, cash-flow growth this year has stabilized in the mid-single digits after an extended period of more robust increases after the recession ended in June 2009.

Looking ahead, most participants expect the modest EBITDA growth rate of 2013 to persist in the quarters ahead. The reason, they say, is that there is nothing on the immediate horizon that appears likely to move the economic needle significantly – assuming, of course, no exogenous shocks that unhinge the global capital markets. – Steve Miller

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Regiment Capital Advisors prices $411M CLO via Wells Fargo

Wells Fargo last week priced a $411.03 million CLO for Regiment Capital Advisors, according to market sources.

The deal, which is the manager’s second to price this year, is structured as follows, according to J.P. Morgan ABS Research (Nov. 22).

Including Regiment, the CLO issuance in the year to date rises to $72.76 billion across 151 deals. Month-to-date issuance stands at $7.8 billion from 16 deals. – Sarah Husband