Clifford Chance

Clifford Chance advises Deutsche Bank on €900 million CLO

International law firm Clifford Chance has advised Deutsche Bank as lead manager, and Intertrust (UK) Limited as trustee, of the €864 million ECAS 2011-1 LOAN B.V. CLO managed by European Capital which closed on 29 June 2011.  This transaction is only the second public sale of a European collateralised loan obligation since the advent of the credit crunch. Clifford Chance also acted previously on the first of these: the ICG EOS Loan Fund I Limited CLO which closed in August last year.

The CLO is backed by a portfolio of mezzanine, second-lien and senior secured loans acquired from European Capital affiliates or managed funds, in addition to which the manager has the flexibility to acquire further loans in the market from third parties until the end of the reinvestment period in June 2013, after which the transaction will amortise.  The transaction contains features typical to most CLOs such as coverage tests, eligibility criteria, collateral quality tests and portfolio percentage limitations.  Currency hedging for non-euro assets in the portfolio backing the issuance is carried out through asset swap transactions.

The senior notes issued by the CLO vehicle were placed with third party investors. The principal amount of the senior tranche is €288 million and was priced at Euribor plus 3.50 per cent.  The senior notes issued by the CLO have been triple-A rated by S&P and are in Rule 144A and Regulation S registered form.  The transaction was also structured so as to be FATCA compliant.

Neil Hamilton, who led the Clifford Chance capital markets team commented "We are delighted to have acted on this important milestone in the recovery of the public CLO market in Europe".

The Clifford Chance team also included trustee partner Esther Cavett, Amsterdam capital markets partner Frank Graaf, tax partners Dan Neidle, Frank de Vos and Don Carden, derivatives partner Claude Brown, New York capital markets partner Fred Utley, Luxembourg capital markets partner Steve Jacoby, and London Associates Martin Sharkey, Tim Cleary and Lara Reis.