Investec priced its debut cash collateralised loan obligation (CLO) earlier this month. It issued E300m (£206.9m) of new notes backed by high-yield loans from its own portfolio. The transaction consists of six tranches maturing in 2026. A CLO is a type of CDO that only comprises loans.
Jacky Kelly, head of Weil’s London securitisation practice, advised Investec on the issue. Kelly is a regular adviser to Investec.
Investec is planning to become a regular issuer of CDOs. This will be some challenge as, according to research by Standard & Poor’s, there is an estimated E8.1bn (£5.6bn) of CLOs in the pipeline in Europe. CLO issuance has increased as financial institutions use the instrument to remove debt form their balance sheets.
However, Kelly believes Investec has the right building blocks in place to support a large CDO issuance.
“The hardest task is finding the assets to back the notes, but Investec has its own portfolio of loans to draw on,” she explained.
White & Case capital markets partner Gavin McClean advised Citigroup as lead manager of the E300m transaction.