Blackstone credit arm to execute European CLO

GSO Capital’s CLO will consist mainly of AAA-rated loans.

GSO Capital Partners is executing a €412.5 million CLO with AAA-rated securities making up over half of the securitisation, according to a person familiar with the matter, the firm’s second European CLO issuance this year.

Potential investors for the Blackstone credit arm’s CLO, on which Barclays served as bookrunner, include Japanese banks, credit hedge funds and European insurance companies and asset managers, the source said. The CLO is scheduled to be priced the week of 25 July and will likely close approximately two to four weeks later.

Some €238 million of the CLO consists of AAA securities, €53 million are rated AA and €22.6 million are rated A. Of the remaining amount, €20.4 million are BBB-rated loans, €24.4 million are rated BB and €11.2 million are rated B-. Some €42.9 million of the CLO is equity.

GSO used its Blackstone / GSO Loan Financing company, publicly traded under BGLF on the London Stock Exchange, as its risk-retention vehicle. As of 31 May, two-thirds of the vehicle’s assets, or €223.3 million, were in its indirect loans/CLO portfolio, according to its monthly report. The remaining one-third, or €110.7 million, were in its direct loan portfolio. Through May, the European CLO market totaled €5.6 billion through 14 deals.

In February, GSO notified investors it planned to establish the Blackstone / GSO US Corporate Funding (BGCF), which would be the investment shop’s US risk-retention vehicle and a state-side BGLF equivalent. BGCF will allow GSO to look for higher returns in US CLO securities