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3i DM prices €452M CLO via Credit Suisse

Credit Suisse today priced a €452 million CLO managed by 3i Debt Management Limited, according to market sources.

Pricing details are as follows:

The transaction has been structured as an originator CLO following the European referendum vote. The manager had previously only issued sponsor transactions to meet the European risk-retention requirements.

The closing date is on September 14 with a non-call period running until October 15, 2018 and reinvestment period until October 15, 2020. The final maturity is on October 15, 2029.

This is the second European CLO for 3i this year, having closed the €413 million Harvest XV CLO on May 12. This was structured as a sponsor transaction, with 3i retaining at least 5% of the transaction via the equity tranche. For Volcker, the transaction included voting, non-voting, and non-voting exchangeable tranches.

To date the manager has issued eight European CLO 2.0s since September 2013. As of Sept. 30, 2015, 3i DM managed 35 funds and had total assets under management of roughly $11.3 billion.

Year-to-date issuance is €8.95 billion from 22 transactions. This is the fourth CLO in Europe for a total of €1.74 billion. — Staff reports

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This story first appeared on www.lcdcomps.com, an offering of S&P Global Market Intelligence. LCD’s subscription site offers 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: Growth in Global Credit, Leverage to Continue. Then: Slow Burn or ‘Crexit’?

corporate debt levels

S&P Global sees global corporate credit demand growing over the next few years, to $62 trillion by the end of the decade, including some $24 trillion in “new” debt (as opposed to refinancings).

At the same time, borrower credit quality is weakening , thanks largely to “monetary expansion” in various countries.

This combination of factors leads S&P to a pair of scenarios, with the assumption that a credit correction of some kind is inevitable:

  • A slow burn, where weak companies fall over gradually (this is the base case assumption)
  • “Crexit”: A system-wide credit contraction, prompted by a series of economic/political shocks. Brexit, for instance … – Tim Cross

 

The full report, Global Corporate Credit: Despite An Inevitable Credit Correction, Debt Demand Will Swell To $62 Trillion Through 2020, is available to S&P Global Credit Portal Subscribers. It was written by Terry Chan, Diego Ocampo, David Tesher, and Paul Watters. It details:

  • Global corporate credit demand, by country
  • New corporate credit demand
  • Corporate credit growth cycle
  • Debt/GDP vs Credit growth
  • Financial risk trends of global corporate sample
  • Distribution of FFO/debt risk categories, by country/industry

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European Leveraged Loans Gain 0.03% Yesterday; YTD Return: 2.81%

The European Leveraged Loan Index (ELLI) gained 0.03% yesterday (excluding currency).

The ELLI has returned 0.91% thus far in July. The total return for the ELLI in the year to date is 2.81%. — Staff reports

EUR_ELLI_Daily_2016_07_19

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In Shadow of Brexit, Burgeoning European LBO Loan Market Proceeds with Caution

european lbo loan volume

U.K. buyouts accounted for only €2.33 billion of LBO volume across the leveraged loan market in 2016’s first half, versus €14.4 billion of supply for non-U.K. buyouts, according to LCD, an offering of S&P Global Market Intelligence.

Note the €14.4 billion is the largest first-half volume for non-U.K. LBOs since the turn of the decade, indicating that sponsors were either keen to raise financing ahead of the June 23 U.K. Brexit vote, or were simply not perturbed by it.

Sponsors expect LBO activity to continue into the second half of 2016, although the U.K.’s decision to leave the European Union has left market participants in a brave new world of financing, and the biggest obstacle to a pick-up in LBOs will be new valuations. – Nina Flitman

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European Leveraged Loans Gain Another 0.09% Yesterday: YTD Return: 2.65%

The European Leveraged Loan Index (ELLI) gained 0.09% yesterday (excluding currency).

The ELLI has returned 0.75% thus far in July. The total return for the ELLI in the year to date is 2.65%. — Staff reports

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This story first appeared on www.lcdcomps.com, an offering of S&P Global Market Intelligence. LCD’s subscription site offers 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 Gain 0.15% Yesterday; YTD Return: 2.56%

The European Leveraged Loan Index (ELLI) gained 0.15% yesterday (excluding currency).

The ELLI has returned 0.66% thus far in July. The total return for the ELLI in the year to date is 2.56%. — Staff reports

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This story first appeared on www.lcdcomps.com, an offering of S&P Global Market Intelligence. LCD’s subscription site offers 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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Post-1.0, Pre-Brexit: European CLO Issuance Hits Record €4.56B in 2Q

European CLO issuance

CLO issuance in Europe rose to €4.56 billion in the second quarter from €2.64 billion in the first, marking the highest such volume in the European ‘2.0’ market’s brief three-year history, according to LCD, an offering of S&P Global Market Intelligence.

The improved market sentiment going into the second quarter — and the strong motivation among arrangers to de-risk from the warehouses amassing on their balance sheets via the CLO take out — helped fuel issuance from March onward.

But the key factor was the abundance of triple-A appetite, much of it flowing out of Asia, which intensified the competition for senior paper and helped drive senior liability spreads down to E+128, from E+150 at the start of the year.

But if AAA demand was abundant, loan supply was less so, and this was cited as a key concern by managers during the past quarter. Managers also had to handle increasing opportunistic transactions, although the Brexit vote has put an end to the flow of refinancings for now.

June had racked up a healthy volume of €1.64 billion, and was set to go higher still until the Brexit vote brought supply to a temporary halt, leaving year-to-date issuance at €7.21 billion. – Sarah Husband

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This story first appeared on www.lcdcomps.com, an offering of S&P Global Market Intelligence. LCD’s subscription site offers 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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Smacked by Brexit Vote, European Leveraged Loans Retreat in June

european leveraged loan returns

Leveraged loans tracked by the S&P European Leveraged Loan Index (ELLI) lost 0.6% in June — reflecting the market’s reaction to the U.K.’s vote to leave the European Union — placing the Index into the red for the first time since February.

Putting June’s loss into context, the Index declined more severely following the global equities crash in February — when it lost 1.22% — but less severely during the Greek debt crisis in June 2015, when it lost 0.31%.

In the U.S., leveraged loans managed to gain 0.02% in June, despite the Brexit vote.

Year to date, European leveraged loans have gained 2.13%, vs 4.51% in the U.S. – Staff reports

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This story first appeared on www.lcdcomps.com, an offering of S&P Global Market Intelligence. LCD’s subscription site offers 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: Accunia Prices 1st European CLO Since Brexit Vote

Deutsche Bank has priced an upsized €421.23 million CLO for Nordic asset management firm Accunia Credit Management, according to market sources. This is the first transaction to price since the Brexit vote last month, and Accunia is based in Denmark. The transaction, which is the first for the manager was upsized from €360.49 million.

The collateralized loan obligation transaction is structured as follows:

Accunia CLO 2016-07-05

Of note, PGIM (Pramerica) is appointed as designated successor manager.

The settlement date is Aug. 4, 2016, and the transaction has a two-year non-call period, a four-year reinvestment period and a 13-year legal final maturity.

All the liabilities are set with 0% Euribor floors. The vehicle is currently roughly 44% ramped, with a three-month ramp-up period from closing.

Accunia intends to comply with European risk retention via a vertical strip as sponsor, while for Volcker, the transaction documentation includes language around manager-replacement rights, with separate voting, non-voting, and non-voting exchangeable tranches.

Including Accunia’s transaction, European CLO issuance rises to €7.63 billion from 19 CLOs, according to LCD, an offering of S&P Global Market Intelligence. This is the first CLO to price in July. — Sarah Husband

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This story first appeared on www.lcdcomps.com, an offering of S&P Global Market Intelligence. LCD’s subscription site offers 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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CVC Credit Partners Raises €650M for Stressed/Distressed Fund

CVC Credit Partners today announced the final close of its Global Special Situations Fund, which focuses on stressed and distressed corporate credit, predominantly across Europe.

cvc credit partners logoRoughly €650 million was raised, which exceeds the €600 million target. The fund received commitments from investors in North America, Latin America, Asia, Europe, and the Middle East.

With more than €1.86 billion already committed to the strategy via separately managed accounts and its credit opportunities vehicles, CVC Credit Partners’ credit opportunities and special situations strategies now have total commitments of more than €2.5 billion.

CVC Credit Partners is the credit management business of CVC. — Luke Millar

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