Apollo Black CLO sales increase in 2010 Prepared for double

Black Lion Apollo Global Management LLC and GSO Capital Partners LP may sell $ 800 million in collateralized loan obligations as soon as this week, pushing the issue of almost double the total last year as the price of the underlying debt is close to highest level this year.

About $ 1.6 billion of CLOs backed by high-performance, widely syndicated loans high risk have been sold this year in the U.S., according to data compiled by us. That depends issued 1.22 billion U.S. dollars throughout the past year, Morgan Stanley, the data show.

The securities market opens after virtually disappearing during the credit crisis, which saw a decline in the issuance of 91.1 billion U.S. dollars in 2007. borrowing costs have increased by 5.4 percent and the highest-rated portions of the CBS have gained more than 2 cents on the dollar this year. Strait yields can lead CLO issuing more debt, creating more buyers for the $ 306 billion of loans maturing in the next four years, as measured by Barclays Capital.

"There has been a significant recovery in the underlying market, which has led to the CLO yield stability," said Vishwanath Tirupattur, head of securitized products research at Morgan Stanley, in a telephone interview. "Prices have risen CLO and are close to being in a position in the new CBS" are possible, Tirupattur said, adding he hopes the issue will continue to increase in 2011.

Oak Hill CLO

CLOs are a type of collateralized debt obligation that the high-performance, high-risk loans and slice them into securities of varying risk and return. Apollo, the investment firm in New York, is increasing its CLO by JPMorgan Chase & Co., which has a target size of $ 400 million, according to people familiar with the situation, who declined to be identified because the terms are not were established.

OSG, the credit investment arm of Blackstone Group LP, has increased its fund with Bank of America Corp. also led to $ 400 million, others said. Oak Hill Advisors LP also poses a CLO with a final size of 405.5 million U.S. dollars owed by the prices before year end.

Elsewhere in credit markets, the extra yield investors demand to own corporate bonds rather than similar government debt maturity fell 1 basis point to 166 basis points, or 1.66 percentage points below this year high of 201 basis points on June 11, according to the Bank of America Global Market Index Merrill Lynch's corporate general. The average yield of 3.645 percent, up from 3.58 percent on Nov. 12.

Procter & Gamble Co. led companies selling at least $ 6.6 billion in corporate bonds, keeping the issue on a record pace in November.

P & G offers

P & G, the world's biggest consumer products, sold $ 1.5 billion in a transaction in two parts, and Prudential Financial Inc., the U.S. insurer second largest life, issued $ 1 billion of bonds, according to data compiled by us . Borrowers have raised more than $ 69 billion through debt offerings this month and are on track to surpass the 124.7 billion U.S. dollars issued in November 2006.

Cincinnati-based sales, P & G was divided by $ 1 billion of 1.8 percent, 5-year notes yield 47 basis points more than Treasuries with similar maturity and $ 500 million debt two-year variable rate paid 4 basis points above the three-month London Interbank Offered Rate, according to our data.

The offer is the second in U.S. dollars this year from the maker of Crest toothpaste and fragrance of Old Spice, following a sale of $ 1.25 billion in February from 2.5-year notes pay a spread 55 basis points, according to our data.

Prudential sold $ 500 million 10-year, 4.5 percent of the debt that the performance of 167 basis points more than Treasuries of similar maturity and $ 500 million of 6.2 percent, the 30-year bonds a spread of 185 basis points, according to our data.

Precautionary Notes

Newark, New Jersey, Prudential hit the corporate bond market after raising nearly $ 1 billion in a share sale on 12 November. The company agreed Sept. 30 to buy American International Group Inc. 's Star Life Insurance Co. and Edison Life Insurance Co., two Japanese companies, for $ 4.8 billion. Prudential reduced the size of the sales of stocks and bonds that it planned to pay for the deal by increasing the cash component.

Bonds Fairfield, Connecticut-based General Electric Co. were the most actively traded U.S. corporate securities by dealers, with 87 transactions of $ 1 million or more, according to Trace, the bond trading service of the Financial Industry Regulatory Authority.

Swaps credit-default in U.S. retail fell after the government said sales in October rose the most in seven months.

The cost of protecting bonds of Plano, Texas-based JC Penney Co. of default dropped 19.8 points to 233.7 basis points, the lowest in five weeks, according to data provider CMA. Contracts Wal-Mart Stores Inc. of Bentonville, Arkansas, declined 0.6 basis points to 39,145.

Default Swaps

The Markit CDX North America Investment Grade Index, which investors use to cover losses on corporate debt or to speculate on creditworthiness, rose 0.2 basis point to an average price of 93.67 basis points, according to the index administrator Markit Group Ltd.

The Markit iTraxx Europe Index of 125 investment grade companies rose 1.68 points to 103.28 basis points at 10:54 am in London.

Indexes rise as investor confidence deteriorates and fall as it improves. The credit-default swaps pay the buyer face value if a borrower defaults on its obligations, less the value of the defaulted debt. A basis point equals $ 1,000 annually on a contract protecting $ 10 million of debt.

In emerging markets, the extra yield investors demand to own property rather than government bond declined 8 basis points to 230, according to JP Morgan index. The differential had fallen to 229 basis points on November 5, lowest since December 2007.

Samurai Sale

Poland began marketing the sale of Samurai bonds in three to five years, according to a person with direct knowledge of the transaction. The government told investors it plans to price three-year bonds to yield more in the area from 70 to 90 basis points of the yen swaps, said the person, who requested anonymity because the information is private. It is expected price five-year bonds with a spread in the area from 85 to 105 basis points, the source said. Samurai bonds are yen-denominated notes sold in Japan by foreign borrowers.

The Standard & Poor's / LSTA U.S. leveraged loan 100 Index has returned 8.4 percent this year after a 52.23 percent return last year. It lost 28.2 percent in 2008. The index was trading at 92.38 U.S. cents on November 15, compared with 87.68 cents December 31, 2009.

ECO Rebound

ECO recovering over most other parts of the credit market after the differential highest-rated portions of the debt widened to 725 basis points over Libor in April 2009 of 23 basis points two years earlier, Morgan Stanley, the data show.

The differential parts rated AAA by S & P were 225 basis points more than Libor from 11 November and that the debt was trading at 91.75 cents, the highest since May 6 agreement to the data. Libor is the rate banks charge to lend to each other. AAA-rated slices have risen 89 cents to 31 December 2009.

"The spreads come in a little more for a full return of the machine, but I think it's possible," said Tirupattur.

S & P said in a November 8 statement may raise the ratings of 415 slices of 146 U.S. CLO transactions corporate.

"As a result of improved credit environment in the speculative-grade corporate headquarters liaison cash flow have continued to benefit from a gradual improvement in the quality of credit guarantee," the company said in a statement scores.

Leveraged loans

While more than 301 billion U.S. dollars of U.S. leveraged loans have been organized this year, which is below the peak of 878.9 billion U.S. dollars in 2007, according to our data. Leveraged loans are typically rated below investment grade, or less than Baa3 by Moody's Investors Service and BBB-by S & P.

"Credit spreads are a function of supply and demand, the ECO print creates the demand for loans that should have the effect of tightening spreads," said Jonathan Insull, a portfolio manager at TCW Group Inc., which oversees about $ 3,700,000,000 in leveraged loans, $ 2,900,000,000 included in CLO. "This should contribute to increased demand, especially in the primary market."

TCW leveraged finance group is the separation of investment manager of Los Angeles, January 01 to become the Red Crescent Capital Group.

Expiration wall

Of the 306.8 billion U.S. dollars of loans coming due by the end of 2014, 198.6 billion U.S. dollars to be paid the last year, according to Barclays and leverage data from S & P Commentary and Data unit. Only 4.5 billion U.S. dollars of bad loans next year.

"This will help the wall of maturity, especially since an administrator will be able to put money into longer-term assets, TCW Insull said in a telephone interview. Many existing OCE are limited by their period of reinvestment in the purchase of assets that mature beyond the next few years.

Apollo, WCAS Fraser Sullivan Investment Management LLC, an investment firm backed by Welsh Carson Anderson & Stowe, Doral Money Inc., along with Babson Capital Management LLC as an advisor to the warranty and tetragon Financial Group Ltd. 's Asset Management LLC LCM CLO has been completed broadly supported by syndicated loans this year.

Deutsche Bank AG CLO priced $ 300 million in October for the Quarter Investment Group, which consists of both middle market and broadly syndicated loans.

- With the help of Tim Catts, Sapna Maheshwari, Boris Korby Mary and Child in New York and Ed Johnson in Sydney. Editors: Khan Faris, Alan Goldstein