Apollo Global Management today announced the largest CLO transaction issued in 7 years in the U.S. through the $1.5 billion ALM XIV fund, making it the largest broadly syndicated fund of its type.
Apollo also announced the pricing of ALME Loan Fund II Limited, a $382 million CLO, which is the second European CLO issued by the company. Apollo currently ranks as the largest CLO manager in the US, with 23 CLOs totaling approximately $13 billion in assets. Since 2010, Apollo has priced 13 U.S. and European CLOs, raising $8.4 billion in aggregate.
Both ALM XIV and ALME II will invest in leveraged corporate loans and both transactions were arranged by JPMorgan Chase.
The collateralized loan obligation (CLO) market is on pace for another record year. CLOs have raised $52.21 billion in the first six months of this year in the US, according to S&P Capital IQ. That’s a 35% change in deal volumeover this time last year. In total, the CLO market reached $81.6 billion in 2013.
Other firms are coming to market with their own CLO offerings, on June 5 of this year, New York Life issued a $412.5 million CLO. Bloomberg reported that the CLO pays the lowest yield spread of the year on the most senior piece of the fund.
Some fear a bubble is underway. Currently, banks own about $70 billion of CLO debt, according to the Loan Syndications and Trading Industry, and may be forced to sell much of its holdings once the Volcker Rule is fully implemented.
Bill Conway, co-chief executive officer at the Carlyle Group, admitted that his firm was surprised at “how ebullient credit markets have been” despite recent geopolitical and macroeconomic events, as PEI reported in a story earlier this month about the leveraged finance market.