BlueMountain Capital Management (BMCM) closed on a $361 million CLO. The new vehicle, BlueMountain CLO 2011-1, is the fourth that the investment management company has brought to market, but its first since the financial crisis. The first three vehicles were issued in 2006 and 2007.
BMCM now manages $1.7 billion in CLO assets, and a total of roughly $6.7 billion across multiple credit strategies.
Industry wide, CLO issuance so far this year is around $8 billion, about double the level for 2010 as a whole, but still a small fraction of the levels of 2004 through 2007. In the wake of the market turmoil of the past couple of weeks, some analysts have been reconsidering their forecasts for full-year issuance, which originally ranged as high as $15 billion.
BlueMountain said in a statement today that only CLO managers with very strong track records and performance have successfully brought new deals this year. The firm said its first three CLOs have been among the top performers in their vintages, paying 28 points, 40 points and 34 points in annualized equity distributions, respectively, the last quarter.
Even so, the firm has held on to a majority of the $39 million in equity in the latest deal.
In addition the equity, BlueMountain CLO 2011-1 consists of a $228 million 'AAA' tranche priced at Libor plus 120 basis points, a $34 million 'AA' tranche priced at Libor plus 200 basis points; a $28 million 'A' tranche priced at Libor plus 300 basis points, a $17 million 'BBB' tranche priced at Libor plus 400 basis points, and a $15 million 'BB' tranche priced at Libor plus 575 basis points.
The vehicle’s final maturity date is Nov. 15, 2022.
"CLOs are an attractive and diversified means for investors to gain exposure to the corporate loan market which we believe offers good value, especially compared to unsecured high yield bonds," Stephen Siderow, president and co-founder of BlueMountain, said in the statement. "The strong performance of our first three CLOs, the depth of our research team and breadth of BlueMountain's other investment activities across the credit markets in North America and Europe, gave us the confidence to come to market."
Charles Kobayashi, who heads BMCM's CLO Investment Management team, is managing the CLO. Bank of America arranged the transaction.