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After Downsize, Apollo Prices €357M CLO via Barclays; YTD

Apollo has priced its €357 million ALME Loan Funding V CLO via Barclays Capital, according to market sources. The AAAs are understood to have priced at a 145 bps discount margin.

The transaction is structured as follows:

The transaction was downsized ahead of pricing, amid widespread concern from CLO managers across the market about how tough the collateral-sourcing environment is currently.

For Volcker the transaction will include voting, non-voting, and non-voting exchangeable tranches.

Compliance with European retention regulation is via the sponsor route, with Apollo holding a vertical strip.

The manager priced its previous European transaction in November via Deutsche Bank, and this latest deal marks its fifth European CLO 2.0. — Sarah Husband

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This story first appeared on www.lcdcomps.com, LCD’s subscription site offering complete news, analysis and data covering the global leveraged loan and high yield bond markets. You can learn more about LCD here.

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Leveraged Loan Price-Flexes Change Course in Europe as Market Strengthens

European leveraged loan price flex

The European leveraged loan market outlook brightened in April, thanks in part to a combination of an uptick in loan repayments and continued CLO issuance, both of which contribute to increased investor demand.

These influences come at a time when primary loan issuance also is improving, though not enough to overwhelm buyside appetite, according to LCD, an offering of S&P Global Market Intelligence.

One example of just how much sentiment has turned: Price-flexes, where the interest rate or discount on a proposed loan is changed during syndication, due to investor demand – reversed course in April, vastly favoring issuers (pricing was lowered during marketing).

In March, in contrast, it clearly was an investors’ market.

You can read more about how price-flexes work here, in LCD’s free Loan Primer Almanac.

This chart was taken from LCD’s monthly European Leveraged Loan Technicals analysis, by Ruth McGavin. It also details

  • Change in loan outstandings vs inflows/outflows
  • Monthly loan repayments
  • Amount of par loans outstanding
  • Loan forward calendar
  • Loan yields

 

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Leveraged Loans: Herbert Park CLO amends transaction as to be Volcker Compliant

Noteholders of GSO/Blackstone’s Herbert Park CLO have been advised that the issuer has amended the transaction documents to enable it to comply with Volcker, by allowing the rated notes to be held in any one of three sub-classes; Collateral Manager (CM) Voting Notes, which will have voting rights with respect to manager removal and replacement, CM Non-Voting Notes, and CM Exchangeable Non-Voting Notes, which will not include voting rights.

The latter class of notes is also exchangeable into CM Voting notes or CM Non-Voting notes. The changes were effective as of May 9.

This follows a similar Volcker-related amendment to Richmond Park CLO.

Both Herbert Park and Richmond Park priced in 2013 ahead of the Volcker Rule coming into effect in 2014.

Last year, ICG sought to Volckerize two of its European CLOs—St. Paul’s II and III—via amendments, while Carlyle amended the AAA tranche on CGMSE 2013-1 CLO and Cairn Volckerized Cairn CLO III via refinancing exercises. — Sarah Husband

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This story first appeared on www.lcdcomps.com, LCD’s subscription site offering complete news, analysis and data covering the global leveraged loan and high yield bond markets. You can learn more about LCD here.

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European Leveraged Loan/High Yield Bond Issuance Down Sharply from 2015

european leveraged finance volume

European leveraged finance issuance – high yield bonds and leveraged loans – so far this year is down roughly 50% from the same period a year ago, according to LCD, an offering of S&P Global Market Intelligence.

As in the U.S., the European speculative-grade market has seen this biggest change. So far high yield has seen €13.8 billion of issuance, down severely from the €38 billion at this point in 2015. European leveraged loan issuance, at €20 billion, is down from the €26 billion at this point last year. – Staff reports

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This story chart is part LCD’s weekly European High Yield analysis, available on www.lcdcomps.com, LCD’s subscription site offering complete news, analysis and data covering the global leveraged loan and high yield bond markets. You can learn more about LCD here.

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European Leveraged Loans Return 1.18% in April, Following Strong March

european leveraged loan returns

Leveraged loans tracked by the S&P European Leveraged Loan Index (ELLI) gained 1.18% (excluding currency) in April, the second-highest return since January 2013, after March’s 1.7% gain, according to LCD, an offering of S&P Global Market Intelligence.

The market-value component of the return was up 0.79% in April, the second-consecutive positive reading after a seven-month string of losses.

April’s gains put the Index further into the black — up 1.77% in the year to April 30 — but it is still lagging last year, when the ELLI gained 2.95% in the first four months (excluding currency). The difference stems from the market-value component, which has advanced by 0.19% so far in 2016, compared to 1.41% in the same period last year. – Staff reports

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This story first appeared on www.lcdcomps.com, LCD’s subscription site offering complete news, analysis and data covering the global leveraged loan and high yield bond markets. You can learn more about LCD here.

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S&P: European High Yield Corporate Default Rate Rises to 1.6% in April

European high yield default rateWith two defaults during the month, the European speculative grade corporate default rate rose to 1.6% in April, according to S&P Global.

Defaulting: Norway forest/paper products concern Norske Skog and UK oil company Edcon Holdings.

The full report on April defaults – including xls files detailing 2016 activity, corporate issuance, and European bond ratings actions – is available to S&P Global Credit Portal subscribers here. – Tim Cross

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European Leveraged Loan Issuance Surges to €6.4B as Refinancings Emerge

european leveraged loan issuance

European new-issue loan volume rose to €6.4 billion in April, making it the second-busiest month so far in 2016, behind January’s buyout-fuelled tally of €8.6 billion. Half of April’s total — €3.2 billion — came from refinancings, as market conditions warmed, allowing a greater range of activity than was seen in the M&A-heavy first quarter.

In April, borrowers raised the highest volume of new loans for refinancing purposes since March 2015, thanks to large transactions such as Inovyn and Numericable. In all, seven borrowers tapped the loan market to refinance existing senior debt, high-yield bonds, or a combination of various debt structures. – Staff reports

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Bankruptcy: Aeropostale Files Chapter 11 in Manhattan; has $160M DIP

Aéropostale today filed for Chapter 11 in bankruptcy court in Manhattan, the company announced.

The company said it intends to emerge from Chapter 11 within the next six months “as a standalone enterprise with a smaller store base, increased operating efficiencies and reduced SG&A expenses.”

The company announced an initial store closure list of 113 U.S. locations, as well as all of it 41 stores in Canada, with closings set to begin in the U.S. this weekend and in Canada next week.

The company further said it was continuing its previously announced sale process, adding that it expects that any potential sale would also be completed within the next six months.

According to Bloomberg, the company has more than 700 locations in the U.S. Over the past three years, it has closed more than 200 locations.

In addition to store closings, the company said it would use Chapter 11 to resolve its ongoing dispute with Sycamore Partners, the company’s largest secured lender and owner of its second largest supplier, that the company said has “put substantial strain on our liquidity while also preventing us from realizing the full benefits of our turnaround plans.”

Among other things, according to court papers, the supplier, MGF Sourcing, has demanded onerous payment terms from the company.

Among other first day motions, the company filed a motion asking the bankruptcy court to require MGF Sourcing, to perform its obligations under its agreements with the company.

Lastly, in connection with the Chapter 11 filing the company has a $160 million DIP facility commitment form Crystal Financial.

In court papers, the company said it received four DIP proposals from prospective lenders, which it narrowed down to two options, one from Crystal Financial and the other from Bank of America.

The facility is comprised of a $75 million term facility and an $85 million revolver, of which the company is seeking immediate access to $45 million and $55 million, respectively, on an interim basis.

Interest under the facility is at L+500. Among others, the facility carries a 5% underwriting fee.

As for milestones, the DIP requires the company to file a reorganization plan within 60 days (July 3), obtain disclosure statement approval within 95 days (Aug. 7), begin soliciting votes on the reorganization plan within 100 days (Aug. 12), begin a plan confirmation hearing within 130 days (Sept. 11), obtain plan confirmation within 140 days (Sept. 21), and emerge from bankruptcy within 145 days (Sept. 26).

In addition, the DIP requires the company to pursue a Section 363 sale process simultaneously with the plan confirmation process on the following timeline: file a motion with the bankruptcy court to approve bid procedures within 75 days (July 18), which shall include a form of a stalking horse purchase agreement; forward bid packages to potential bidders within 75 days (July 18); obtain approval of a stalking horse sale and bid packages within 105 days (Aug. 17); conduct an auction within 141 days (Sept. 22); obtain approval of a sale within 143 days (Sept. 24); and close on a sale within 145 days (Sept. 26).

The DIP provides that while the company may abandon the reorganization plan confirmation process at any time during the proceedings, it may not abandon the sale process without the lenders’ consents. — Alan Zimmerman

This story first appeared on www.lcdcomps.com, LCD’s subscription site offering complete news, analysis and data covering the global leveraged loan and high yield bond markets. You can learn more about LCD here.

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2016 European High Yield Bond Issuance, by Country

european high yield bond issuance by country

French companies are the most active high yield issuers in Europe this year, with eight offerings totaling €1.9 billion, according to S&P Global Market Intelligence LCD.

Automotive engineering/production concern Faurecia was the largest French issuer, with a €700 million deal, most of which backed repayment of 9.375% notes (the new issue priced to yield 3.625%, making for a hefty cost reduction for the company). – Staff reports

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This analysis first appeared on www.lcdcomps.com, LCD’s subscription site offering complete news, analysis and data covering the global leveraged loan and high yield bond markets. You can learn more about LCD here.

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Leveraged Loans: Purchase Price Multiples on European LBOs Rise

european LBO purchase price multiple

LBOs in Europe are getting more expensive for private equity sponsors.

The average purchase price, as a multiple of trailing EBITDA, reached 10x in 2016’s first quarter, more than any full-year average, according to S&P Global Market Intelligence LCD.

The multiples paid on these buyouts fall across a wide range. Many of the deals that came to market in the first quarter were bought for an unremarkable multiple, in the 8–9x area, but a good handful of transactions topped 10x — some by a fair margin. – Ruth McGavin

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This story first appeared on www.lcdcomps.com, LCD’s subscription site offering complete news, analysis and data covering the global leveraged loan and high yield bond markets. You can learn more about LCD here.