The Carlyle Group is planning a $494.2 million CLO. The deal, dubbed Carlyle Global Market Strategies CLO 2012-1, would be the private equity firm’s thirty-third, and its first new issue for 2012. It is an arbitrage cash flow CLO with a four-year reinvestment period, scheduled to end in April 2016, according to a presale report by Fitch Ratings.
CGMS CLO 2012-1 has a $320 million triple-A rated tranche with a target interest rate of Libor plus 145 basis points. It is being arranged by Wells Fargo Securities and Mitsubishi UFJ Securities.
Fitch said the structure and portfolio composition of CGMS CLO 2012-1 closely resembles recently issued CLOs, although the length of the reinvestment period is at the higher end of the range for recently deals.
While no assets have been purchased, approximately 81% of the portfolio has been identified, consisting of 174 loans from 162 high-yield obligors. Fitch considers the portfolio to be somewhat more diversified in terms of the number of unique obligors than the majority of CLOs issued over the past six months.
The identified portfolio consists of 96% senior secured loans and 4% second lien loans.
Discretionary trading is limited to 25% of the portfolio each year (as measured by the portfolio balance at the beginning of each calendar year) and is only permitted during the reinvestment period, according to the presale report.
The asset manager will be permitted to sell defaulted assets, credit-risk assets, and credit-improved assets and equity securities at any time, including after the reinvestment period. While proceeds from credit-risk sales may be reinvested after the reinvestment period, proceeds from defaulted, credit-improved, or equity sales may not.
Carlyle manages a total of $16 billion CLOs. Since August 2010, the firm has added $10.5 billion in CLO assets, through the acquisition of funds or management contracts from Highland Capital Management, Stanfield Capital, Mizuho Financial Group, Foothill Group and Churchill Financial Group and through the closing of a new $507 million CLO in 2011.