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Guggenheim prices $856.75M CLO via Citi; MTD issuance hits $13.6B

Citigroup today priced an $856.75 million CLO for Guggenheim Partners Investment Management, which was upsized for a second time, according to sources.

The transaction is structured as follows:

Recall the transaction was initially outlined as $654.55 million, though it had previously been increased to $805.4 million.

The deal has a two-year non-call period, a four-year reinvestment period and a 12-year legal final maturity.

The asset manager yesterday also priced its $558.9 million Kitty Hawk CLO 2015-1 deal via Mitsubishi UFJ Securities, though note this is Guggenheim’s third print in the U.S. this year.

CLO issuance in the year to date now stands at $28.11 billion from 52 deals, according to LCD. March issuance is $13.58 billion from 25 deals. Though there are still a couple more days left in the month, issuance thus far in March is the highest since June 2014, when $13.78 billion of deals priced. – Kerry Kantin

For more on how the CLO markets work check out LCD’s Loan Primer. 

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Leveraged loan market sputters to lowest 1Q volume since 2010

leveraged loan volume - M&A

Bolstered by a troika of large, well-rated, corporate M&A loans – Dollar Tree ($6.2 billion), Valeant Pharmaceuticals, ($5.15 billion), and Ball Corp. ($3 billion revolver) – new-issue volume has risen in the first quarter, to $80.7 billion, including $53.9 billion of institutional tranches, from a three-year low of $66.6 billion/$43.4 billion over the prior three months.

Still, participants are not exactly breaking out the cigars and champagne. The primary market is off to a flat-footed start versus the liquidity-heavy/regulation-light first quarter of 2014, when arrangers placed $168 billion of new issues, including $129 billion of institutional facilities. In fact, 2015 is off to the slowest start for any year since 2010. – Steve Miller

This analysis is taken from a longer LCD News story, available to subscribers here, that details first-quarter leveraged loan activity in full.

Follow Steve on Twitter for leveraged loan market news and insight. 

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Capitala and Kemper form new loan-focused JV fund

Business-development company Capitala Finance Corp. has formed a new investment joint venture with Trinity Universal Insurance Company, a subsidiary of Kemper Corp. The new venture, Capitala Senior Liquid Loan Fund I, will focus on investments in broadly syndicated loans beginning in the second quarter.

The initial equity contribution is $25 million, of which Capitala is funding $20 million and Trinity is providing $5 million. In addition to that the new fund secured third-party asset-level financing.

Capitala Finance, a BDC that trades on the Nasdaq under the ticker CPTA, traditionally targets debt and equity investments in middle-market companies generating EBITDA of $5-30 million. The firm focuses on mezzanine and subordinated deals but also invests in first-lien, second-lien and unitranche debt. Capitala’s portfolio as of Dec. 31 consisted of 52 portfolio companies with a fair market value of $480.3 million. Of that total, 31% was senior secured debt investments, 46% was subordinated debt, and 23% was equity and warrants. – Jon Hemingway

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Amid “challenging” commodities mart, California Resources lenders OK easing of leveraged loan covenants

California Resources disclosed today that its lender group has approved amendment provisions to its credit facility to provide the company with flexibility under its leverage and interest covenants during a challenging commodities market.

The company’s 6% notes due 2024 gained a point, to 87.50, to yield 7.85%, on the amendment news, while its 5% notes due 2021 were up about seven eighths of a point, to 89.5%, to yield 7.58%.

Under the terms of the amendment, California Resources is now allowed to maintain a leverage ratio based on the schedule below. Previously, the leverage ratio was set at 4.5x.

The interest expense ratio, meanwhile, has been set at 2.5x through the third quarter of 2015 and then at 2.25x in the fourth quarter of 2015, and then back to 2.5x in the first quarter of 2016 and thereafter. The interest expense ratio was previously set at 2.5x.

Also, the lien basket has been reduced to 5%, from 15%. The asset coverage ratio has also been set at 1.05x through Dec. 31, 2016 and at 1.5x thereafter.

The company’s pro rata credit facility is split between a $2 billion revolver and a $1 billion A term loan, both due 2019. Pricing is based on a leverage-based grid, ranging from L+150-225, with commitment fees ranging from 30-50 bps.

J.P. Morgan is administrative agent. The lender group also consists of Bank of America Merrill Lynch, Citigroup, Bank of Tokyo-Mitsubishi UFJ, U.S. Bank, Morgan Stanley, HSBC, Goldman Sachs, Bank of Nova Scotia, Societe Generale, PNC Bank, BB&T, Bank of New York Mellon, Sumitomo Mitsui, Intesa Sanpaolo, and KeyBank.

Los Angeles-based California Resources is an oil and natural gas exploration and production company and is rated BB+/Ba2. – Richard Kellerhals/Joy Ferguson

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US Trustee names New York lawyer Richard Davis as Caesars examiner

The U.S. Trustee for the bankruptcy court in Chicago has named Richard J. Davis as the examiner in the Chapter 11 case of Caesars Entertainment Operating Co., court filings show.

The appointment is subject to approval by the bankruptcy court in Chicago that is overseeing CEOC’s Chapter 11.

As reported, the Chicago bankruptcy court on March 12 ordered the U.S. Trustee to appoint the examiner. In a setback for the company, the bankruptcy court appeared to set a wide scope for the contemplated investigation, and did not set specific limits on either the cost or length of the investigation, both of which were sought by the company (see “Caesars’ examiner probe to have broad scope, judge rules,” LCD, March 12, 2015 $).

The order does require the examiner to submit an interim report every 45 days, and to file a final report within 60 days of completing his investigation.

According to materials submitted to the bankruptcy court, Davis, 68, is in individual practice in New York City. From 1981 to 2012, he was a litigation partner at Weil, Gotshal & Manges, and from 1977 to 1981, during the administration of President Jimmy Carter, he was an Assistant Secretary of the Treasury for Enforcement and Operations.

Going back even further, Davis was a special prosecutor for the Watergate Special Prosecution Force, including serving as chief trial counsel in the trails of Dwight Chapin, an advisor to President Nixon, and Edward Reinecke, a former Lieutenant Governor of California. Both were convicted of perjury; Chapin served nine months in prison, while Reinecke, sentenced to 18 months, saw his conviction overturned on appeal.

A hearing on the U.S. Trustee’s emergency motion to name Davis as the examiner is scheduled for tomorrow. – Alan Zimmerman