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Barings Prices Europe’s First Ever Private Credit CLO

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Reporting: Hugh Minch

Barings has priced the first ever private credit CLO in the European market, the firm has announced. BNP Paribas arranged Barings Euro Middle Market CLO at €380.6 million.

The CLO has a combined €235.6 million triple-A notes split across three tranches, each of which yield EURIBOR+ 147 bps, which is 17.8 bps wide of the 10-day rolling average for European CLOs backed by broadly syndicated loans. The weighted average cost of capital is 253.09 bps and the capital structure is levered 11.28x.

In a press release announcing the transaction, Barings head of global CLOs Adrienne Butler said she was proud and excited to be a first mover in the evolution of CLOs in Europe.

“To date, the difficulty in creating a diversified portfolio has prevented a true middle market CLO from being executed in Europe” Butler said. “We have noted investor interest in the space for several years and having issued seven US middle market CLOs since 2017, Barings has the knowledge and expertise to provide a solution in this untapped area of the market.”

“Due to Barings being a leading European direct lender, we were able to create a diversified portfolio of nearly 50 private credit loans representing eight countries, in addition to a European broadly syndicated loan bucket to add to the diversification” said Joe Evanchick, head of Middle Market CLOs at Barings.

The CLO is a combined effort of Barings’ global CLO team and its global private finance group, Barings says, with both teams selecting the initial assets and managing the portfolio.

The CLO is a static transaction with a one year call lock ending Dec.16, 2025. The CLO has a 10 bps senior management fee and 25 bps subordinated management fee, plus quarterly incentive fees equal to 5% of interest proceeds available before the class B interest payment. The CLO will close on Dec. 16 and reach maturity on April 20, 2037, after 12.3 years.

Octus was first to report the existence of Barings’ European private credit CLO plans after the manager registered the fund with the Companies Registration Office Ireland in October.