Aviva, NIBC close £620m infra CLO

The Adriana Infrastructure CLO is backed by loans to operational PPP projects in the UK that were originated by NIBC.

Dutch bank NIBC and UK insurer Aviva have successfully placed the Adriana Collateralised Loan Obligation (CLO) vehicle.

The CLO comprises £620.6 million (€733.2 million; $995.5 million) of loans to operational public-private partnership (PPP) projects in the UK that were originated by NIBC and are denominated in pounds sterling.

Seventy-seven percent of the total notes of Adriana are Aaa-rated with a weighted average life (WAL) of approximately ten years. A total of £477.8 million of class A1 notes have been placed with Aviva, with NIBC acting as sole arranger and sole lead manager. The class A1 notes have a coupon of six-month GBP LIBOR +120 basis points.

Jeroen Drost, chief executive of NIBC Bank, said his own organisation and Aviva had demonstrated that they were “at the forefront of co-operation between banks and institutional investors for long-term financing solutions”.

The CLO is another example of the innovative structures being put together to ensure transfer of infrastructure assets from the balance sheets of banks to the long-term home offered by institutional investors.

It is not clear whether there will be many more examples of the CLO approach, however. In a statement, Drost was upbeat, saying: “This is definitely the sort of transaction and structure that we will see more and more of in the future.”

However, in conversation with Infrastructure Investor, Aviva insurance LDI fund manager Munawer Shafi was more cautious. He pointed out that CLOs have been rare in infrastructure as it is considered to be a relatively illiquid asset class. He also said that putting a successful structure together was “tricky” and that not many organisations would have the requisite skills.

Referring to Adriana, Shafi said: “For us it’s a good deal as it offers a good return with decent credit enhancement.”

Aviva has been highly active in infrastructure recently. Earlier this week, it acquired a residential solar photovoltaic systems portfolio from infrastructure fund manager Zouk Capital through its REaLM Infrastructure Fund.

Last week, Aviva bought €84.5 million of senior secured notes in a private placement by Dutch telecoms firm Reggefiber.