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.
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
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