(Bloomberg) -- Hedge fund Chatham Asset Management is launching a platform that will manage and invest in the $1.3 trillion collateralized loan obligation market, according to a statement seen by Bloomberg.
Thomas Flannery, who had been a portfolio manager with Credit Suisse Asset Management until earlier this year, is set to join Chatham to spearhead the new business called CTM Asset Management. Chatham will provide funding for the equity portion of CLOs, according to a person with knowledge of the matter. CTM will start issuing CLOs — leveraged loans repackaged as bonds — in 2025, the person added.
Chatham has tapped other senior credit staffers for the business, including Matthew Sosland, who previously worked at Advent Capital Management, where he was a portfolio manager, and Andrew Chatham, who was at Assured Investment Management and focuses on structured credit. Chuck Chakrala, who previously worked at Sound Point Capital Management, is joining as head of CLO operations and compliance.
Investment firms globally have been jumping into the CLO market to issue new deals. In Europe, Royal London Group and Macquarie Group are in the early stages of setting up CLO platforms. In the US, companies including Warwick Capital Partners priced their debut deals last year. With sales so far this year running more than 70% higher compared to last, issuance of floating-rated debt in the US is on track for a record year, according to data compiled by Bloomberg News.
Demand for the floating-rate debt has bounced back recently, as financial institutions globally bought the safest portions of the securities, rated triple A. On the flip-side, slowdown in M&A activity, along with leveraged loan prices climbing over the past year, has put pressure on new CLO creation.
Still, September is bringing a flood of issuance to the junk-rated debt market. Roughly $53.9 billion of deals have launched in the leveraged loan market so far this month, with 15 coming on Monday, according to data compiled by Bloomberg. The high-yield bond market has also priced $7.6 billion of issuance so far this month.
(Updates high yield debt issuance in last paragraph. A previous version corrected third paragraph to clarify timing of prior roles.)
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