Bloomberg News

Apollo Said to Sell $436 Million CLO for First Europe Deal

April 12, 2013

Leon Black’s Apollo Global Management LLC (APO:US) priced an increased 334 million-euro ($436 million) collateralized loan obligation for its first deal in Europe, according to three people with knowledge of the matter.

The ALME Loan Funding 2013-1 Ltd. includes 195 million euros of AAA rated notes paying 130 basis points more than the euro interbank offered rate, said the people, who asked not to be identified because the deal is private. The deal was increased from 306.5 million euros it sought in March, according to data compiled by Bloomberg.

Investor demand for structured credit products allowed the New York-based firm to price the transaction at lower spreads than proposed last month. The deal brings the issuance volume in Europe to almost 1 billion euros this year after Cairn Capital Ltd. and Pramerica Investment Management Ltd. sold their CLOs.

The spread for AAA rated portions of new European CLOs may fall to 120 basis points by the end of the year, according to a JPMorgan Chase & Co. research report citing a client survey. Cairn sold the top-rated portion of its European CLO at a spread of 140 basis points, according to data compiled by Bloomberg.

Citigroup Inc. and JPMorgan forecast 3 billion euros of European CLO this year.

CLO Spreads

The 27 million-euro AA-ranked portion of the Apollo CLO was priced at 185 basis points more than Euribor, compared with 225 basis points originally proposed, said the people. A basis point is 0.01 percentage point.

Citigroup arranged the CLO that has a three-year reinvestment period and settlement on May 15, 2013, the people said.

Apollo manages more than $64 billion of credit investments, including $20 billion in senior secured loans.

Charles Zehren, a spokesman for Apollo in New York, declined to comment. A spokesman for Citigroup in London, who asked not to be identified citing company policy, couldn’t immediately comment.

CLOs are a type of collateralized debt obligation that pool high-yield, high-risk loans and slice them into securities of varying risk and return.

Details of the CLO are as follows:

Class        Size (Eur)      rating     Spread      Price
A1 Notes     195 million    Aaa/AAA      E+130        100%
A2 Notes      27 million       AA        E+185        100%
B Notes       27 million        A        E+285        100%
C Notes     15.2 million       BBB       E+390        100%
D Notes     11.9 million        BB       E+475    Not offered
E Notes       13 million         B       E+600    Not offered
Equity      45.1 million       N/A       Not offered

To contact the reporters on this story: Patricia Kuo in London at pkuo2@bloomberg.net; Esteban Duarte in Madrid at eduarterubia@bloomberg.net

To contact the editors responsible for this story: Faris Khan at fkhan33@bloomberg.net; Shelley Smith at ssmith118@bloomberg.net


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Companies Mentioned

  • APO
    (Apollo Global Management LLC)
    • $24.37 USD
    • 0.13
    • 0.53%
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