40¦86 Advisors Inc. is preparing a $350 million collateralized loan obligation, according to a presale report published by Moody’s Investors Service.
The deal, Silver Creek CLO, will be backed by a broadly syndicated loan portfolio, consisting only of corporate debt. First-lien senior secured loans and eligible investments must make up a minimum of 95% of the portfolio.
Five tranches of notes will be issued; including Aaa’ preliminarily rated $236.25 million class A notes, offered at three-month Libor plus 149 basis points. The notes will benefit from an effective subordination of 32.5%.
The underwriter for the transaction is Goldman Sachs.
The notes cannot be called until July 2016, and have a standard reinvestment period of four years.
40¦86 expects to the indicative portfolio to be approximately 72% ramped at closing later in July.
40¦86’s last CLO deal was $371.6 million Cedar Creek CLO, completed in March 2013. The transaction was also backed by a pool primarily of broadly syndicated senior secured loans. Standard & Poor’s rated the $264 million class A notes AAA.’ Seven other tranches of notes were issued, including two classes of subordinated notes.
Based in Carmel, India, 40¦86 was founded in 1981, and is a fixed income investment advisor—and wholly owned subsidiary—of CNO Financial Group. In addition to Silver Creek, 40¦86 currently manages four other CLOs rated by Moody’s, and currently has approximately $34 billion of assets under management. The firm manages in public corporate debt securities, taxable municipal bonds, market securities, high yield bonds, government bonds, bank loans, commercial mortgages, mortgage related securities, and privately placed debt securities.