Fund Managers

GSO launches new European CLO

GSO's €403.7 Grand Harbour I is said to be the largest European CLO since the crisis. 

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The Blackstone Group credit-affiliate GSO Capital Partners has launched a €403.7 million CLO, reportedly the largest European-focused CLO since 2008.

The CLO, called Grand Harbour I BV, has been arranged by Citigroup. It is said to include €240 million in AAA notes, and has already been 85 percent filled with product. 

Blackstone declined to comment at press time. A spokesperson for Citi could not be reached for comment.

The European CLO market is finally showing signs of life after years of languid activity. In February, Cairn Capital sold the first European CLO since 2011, a €300.5 million vehicle that was arranged by Credit Suisse, and Apollo Global Management reportedly arranged its first European CLO through Citi last month.

“In spite of a relative lack of appetite for securitisation and a marked decline in Collaterised Loan Obligation (CLO) activity, the market is expected to heat up in the first six to nine months of 2013 before the CLO market reinvestment window starts to close. Indeed, new European CLO’s are beginning to reappear for the first time in 2013,” according to a DLA Piper’s 2013 Acquisition Finance Debt Report.

The European CLO market remains hamstrung by uncertainty and regulation, the report adds.

“The market in Europe for loans remains attractive for institutional investors like GSO. We think that it’s going to continue to be more attractive in the short, medium and long-term,” said one source with knowledge of Grand Harbour. The source added that as banks have scaled back their lending businesses, the market opportunity for established players such as GSO has grown.

“There has been a consolidation in the European market, with a lot of smaller managers being unable to raise money, and larger managers like [GSO] can access capital.”

Blackstone priced two CLOs totaling $2.8 billion in assets under management during the first quarter of 2013, according to an earnings report released Thursday. Blackstone has $23.6 billion in assets under management through its CLO strategy.