UBS and Bank of America are launched a $500 million senior bank loan credit facility for real estate finance company CharterMac last Thursday. The new facility, consisting of a three-year, $150 million revolver and a six-year, $350 million term loan, will be used to finance the acquisition of ARCap Investors, a private real estate finance company specializing in high yield commercial mortgage-backed securities. Moody's Investors Service and Standard & Poor's have assigned Ba3 and BB ratings to the facility, respectively.

In addition to supporting the acquisition, proceeds from the credit will go toward paying transaction costs, retiring existing debt and for general corporate purposes, according to Alan Hirmes, CFO of CharterMac, in a release.

A bank loan investor said he expects price talk on the deal to be in the Libor plus 200 basis points context. It is tough to tell how the deal is going to go, he said, stating that this is not a "plain vanilla" syndicated loan. "It could either be so unique that everybody has to have it, or it could be something that people aren't traditionally used to looking at, taking them a lot of time and pricing wider than its ratings alone would dictate," he said. "If I was a betting man, I would probably bet on the latter."

Moody's assigned New York-based CharterMac a corporate family rating of Ba3 with a stable outlook based on the expectation that the company will maintain its market share in affordable housing finance, while growing its credit enhancement, pension advisory and mortgage banking businesses without deterioration in asset quality. Moody's also suggested that "the ARCap transaction is the latest in a series of acquisitions in which CharterMac is seeking to grow and diversify the means by which it serves both its investors and borrowers, a credit positive." The deal is anticipated to close in the third quarter.

(c) 2006 Asset Securitization Report and SourceMedia, Inc. All Rights Reserved.

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