ABN Amro is acting as lead manager on a E700 million ($857 million) synthetic collateralized loan obligation, the first CLO in which it has been involved. The bank is marketing Harbourmaster Pro Rata on behalf of Dublin-based Harbourmaster Capital Management.
The deal is expected to have a debt component of E230 million and a pre-placement super senior AAA tranche of E470 million. It is in the early stages of marketing and ABN has so far seen solid demand for all classes, said Ben Metcalf, head of the ABS syndicate at ABN. The underlying collateral portfolio is comprised of around 95% senior secured leveraged loans managed by Harbourmaster, with a maximum of 5% unsecured loans. The collateral includes revolving credit facilities and term loans. ABN is providing the funding and acting as lead manager.
ABN is marketing the CLO at a time when the European CLO market is seeing increased volume with market participants are expected to see between E16-18 billion of new issuance this year, up from about E12-13 billion last year. He added that ABN likes to get involved in as many areas of the ABS market as possible and CLOs are seen as a particularly lucrative and growing part of the market which it would like to be more involved in. The firm brought Ian Robinson over from its portfolio management group to head up its CLO team two months ago. Robinson said the market is up 66% this year compared with this time last year.
Year to-date European CLO issuance stands at E4.8 billion, with 10 deals from banks including Banc of America, Credit Suisse, Citigroup and Merrill Lynch. “CLOs offer reasonable spread levels compared to more vanilla ABS transactions, and investors are getting comfortable with them,” reflected Metcalf on the strong flow. Officials at Harbourmaster did not return calls by press time.