Despite a turbulent equity market, Constellation Financial Management was able to price its $146 million 12b-1 fee ABS issue in late June via Bear Stearns. The deal was initially sized at $290 million, but due to market conditions was scaled down. The Aa2'/AA' (MDY/FTC) rated 2.75-year average-life deal cleared at 175 over one-month Libor.
The single offered tranche deal reportedly has approximately 9.91% in overcollateralization. FEP Receivables Funding is securitizing the 12b-1 fees or distribution fees associated with Class B shares of mutual funds. Different from past Constellation transactions, investors will benefit from the transaction having a downside floor via an Asian style put option.