Carlyle US CLO 2025-3 is issuing a cash-flow CLO transaction that is collateralized primarily by broadly syndicated senior secured corporate loans and managed by Carlyle CLO Management.
The CLO is backed by a $600 million portfolio of non-investment-grade broadly syndicated loans and other assets that the manager purchases from and trades in the primary and secondary markets, according to Moody's Ratings.
Net proceeds from the issuance of the secured and subordinated notes will provide financing on a portfolio of primarily first-lien senior secured leveraged loans.
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The CLO will issue $612 million in several classes of notes that receive quarterly interest payments and principal payments in order of seniority after the 5.1-year reinvestment period. In addition, the CLO will issue subordinated notes that receive payments from residual interest and principal proceeds, Moody's said.
The portfolio is diversified across various industries and obligors. The transaction includes specific conditions for reinvestment during and after the reinvestment period. These conditions would reduce the effective risk horizon of the portfolio during stress periods, Fitch Ratings said.
A strength factor for the portfolio, according to Moody's, is that the CLO must hold a minimum of 90% first-lien senior secured loans and eligible investments. One credit challenge is that the senior secured loans could be subordinated to large super senior working capital facilities. Also, if the CLO were to repurchase some of its notes, there is no requirement to maintain the notes' then-current subordination levels.
The notes benefit from credit enhancement and standard U.S. CLO structural features.
Fitch didn't rate the $384 million of class A notes, paying a coupon of 3-month SOFR+1.38, or the $61.6 million of subordinated notes, paying residual interest.
Fitch rated the class B notes, totalling $71 million and paying 3-month SOFR+1.70, as AA; the $33 million of class C notes, paying 3-month SOFR+2, as A; the $40 million of class D notes, paying 3-month SOFR+3.05, as BBB–; and the $22.5 million of class E notes paying 3-month SOFR+5.25 as BB–. The rating agency considers classes B, C, D and E to have a stable outlook.
Moody's assigned a provisional rating of AAA to the class A notes but didn't rate notes B, C, D, E and the subordinated notes.
The CLO manager is Carlyle CLO Management, the issuer is Carlyle US CLO 2025-3 Ltd, and the co-issuer is Carlyle US CLO 2025-3 LLC.
U.S. Bank Trust Company, National Association is the trustee and collateral administrator, while Nomura Securities International is the underwriter.
The legal final maturity of the CLO is July 25, 2038.
