Investec Plc (INVP), the owner of a bank and money manager in South Africa and the U.K., postponed the sale of a European collateralized loan obligation it had been working on with Pramerica Investment Management Ltd.
The Pinewood CLO 2013-1 BV CLO was raising 306.2 million euros ($406 million), according to two people with knowledge of the matter, who asked not to be identified because the transaction is private.
“European CLO market still feels a bit like an orphan despite the positive deal flow this year,” said Neil Taylor, a London-based senior portfolio manager at Catalina Asset Management, which invests in structured products. “For the market to be sustainable, you need a solid group of investors across the capital structure and that’s still lacking in Europe.”
AAA rated European CLO notes in August have been priced with coupons ranging from 135 basis points to 155 basis points more than the euro interbank offered rate, compared with 125 basis points to 140 basis points in the first seven months of the year, according to data compiled by Bloomberg. A basis point is 0.01 percentage point.
The postponement came after credit managers raised 4.5 billion euros of European CLOs this year, the highest since the peak in 2007, Bloomberg data show.
Ursula Nobrega, a spokeswoman for Investec, didn’t immediately reply to an e-mail seeking comment. Daisy Hall, a spokeswoman for Pramerica employed by FTI Consulting, declined to comment.
CLOs pool high-yield loans and slice them into debt securities of varying risk and return, typically from AAA ratings down to B. The lowest portion, known as the equity tranche, offers the highest potential returns and the greatest risk because investors are the first to see their interest payouts reduced when the loans backing the CLOs default.
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