ICG increases latest CLO to €550m

ICG's latest CLO has become the largest in Europe after the firm enlarged it by €150m, citing strong investor demand. 

Intermediate Capital Group has increased the size of its latest CLO offering to €550 million, well above its initial target size of €400 million, the firm announced in a statement Friday. The fund, called St. Pauls III, is the largest CLO issued in Europe this year.

JP Morgan acted as the sole book runner and placement agent on the transaction. RBS served as co-financial arranger, according to a statement.

“This is the largest CLO issued in Europe this year and ICG’s fourth issue since the financial crisis,” said ICG’s head of credit fund management Dagmar Kent Kershaw.Strong investor demand for St Paul’s III has required us to increase the size of the CLO which is a pleasing for the overall CLO landscape in Europe.”

The new issuance includes €326.7 million of AAA/AAA rated notes; €64.9 million of AA/AA; €32.4 million of A/A; €26.4 million of BBB/BBB; €33 million of BB/BB-; €15.4 million in B/B- and €57.7 million in sub-notes.

“Underlying loan spreads are still wide in Europe, so the arbitrage still works at the equity level,” Kershaw told Private Debt Investor. “A number of investors who had been buying US details are now looking to Europe because, they’re always looking for a premium, and they now think that premium is here.”

Although European CLO volume has yet to return to its pre-crisis heights, some have argued that the value proposition on the continent exceeds that of its US counterparts, where issuance is hitting record levels.

“The supply of assets is OK for the US. The demand for the CLOs exceeds the size of the assets however,” said Colin Atkins, managing director at The Carlyle Group, while participating in a panel at Private Debt Investor’s Capital Structure Europe last month. “The better value is in Europe.”

ICG was founded in 1989 and manages €12 billion in assets. The firm’s credit business has €4.9 billion under management, and specialises in senior loans, high yield bonds and structured credit.