CBAM CLO Management priced its third collateralized loan obligation deal of the year Thursday, a $1.3 billion notes offering that makes the 2017 newcomer the busiest primary CLO issuer to date.
According to presale reports and data compiled from Thomson Reuters LPC's monthly leveraged loans reports, CBAM has now priced $4.2 billion. That exceeds both GSO Blackstone ($2.8 billion across four deals) and CIFC ($2.1 billion, three deals), which were both the leading issuers of CLOs (excluding refinancings) heading into the second half of 2017.
CBAM’s deals have all exceeded $1 billion, in a year when the average CLO size has been $577.8 million, according to Thomson Reuters LPC figures.
CBAM was formed last year in a partnership with private equity firm Eldridge Industries, led by ex-Guggenheim president Todd Boehly, and three former CLO executives with experience at Guggenheim, Octagon Credit Investors and Och-Ziff.
Of the nearly $5 billion in total assets under management with CBAM, just less than half that total are through managing the loan investments of Security Benefit Life, another Eldgridge-controlled entity, according to sources familiar with the relationship. SBL is a Topeka, Kan.-based insurer and retirement benefits management firm that has nearly $36 billion in AUM.
Insurance-industry affiliated managers have been a recent trend in the CLO industry, as insurers like Guardian Life and TIAA-CREFF have stepped out of their traditional investor roles in CLOs after risk-retention rules thinned the ranks of less-capitalized managers.
CBAM’s management team includes three longtime CLO and distressed-asset investment veterans. Partner Don Young was previously head of the performing credit business for Och-Ziff and a senior portfolio manager for Octagon Credit Investors. Mike Damaso, also a partner, served 13 years as senior managing director, portfolio manager and investment committee chairman for Guggenheim Investments and a $68 billion corporate-credit platform.
Managing director Jay Garrett also joined CBAM at startup, with CLO management experience at MatlinPatterson Asset Management and Ahab Capital Management.
CBAM is one of five debut managers in 2017 that have issued in aggregate more than $6 billion in new deals. Two of those deals came with large-scale offerings of middle-market corporate loans: Antares Capital Advisors’ $2.1 billion Antares CLO 2017-1, and two MidCap Financial Services Capital Management deals totaling $1.8 billion.
CBAM 2017-3, which was rated by Fitch Ratings, was one of two deals to price last week in the market – and the only two to price so far in September at a tally of $1.8 billion, according to JPMorgan’s daily leveraged loan and high yield market report. Also coming to market was Credit Suisse Asset Management’s (CSAM) $519 million Madison Park Funding XXVI.
Last month the market added $11.9 billion in new CLO deals, the second busiest month of the year, which has had $72.3 billion in new-deal volume – equaling the entire 2016 issuance level of U.S. primary market CLOs.
Seven other new primary deals await closing dates, according to presale reports published this month, including the $501.6 million RR 2 portfolio pieced together by Redding Ridge Asset Management, a subsidiary of Apollo Global Management; PGIM’s fourth CLO of 2017, the $510 million Dryden 54 Senior Loan Fund.; the $460.2 million Apex Credit CLO 2017-II; the $557 million Wellfleet CLO 2017-2 from Wellfleet Credit Partners; and a fourth 2017 CLO deal totaling $814.4 for CIFC, which would ramp up its 2017 primary issuance volume to $2.9 billion when CIFC Funding 2017-IV closes on its expected date of Sept. 19.
Also in the market is RIN Ltd., a $431.3 million collateralized debt obligation of senior loans issued primarily for infrastructure project-finance construction and operation. The deal is managed by Deutsche Asset Management’s real estate investment unit RREEF America.
Managers have taken a breather on refinancings and resets with no deals priced in the first two weeks of September, but those deals appear to be rolling into the pipeline again, too, according to recently issued presale reports. They include the $416.37 million Neuberger Berman CLO XV issued in October 2013, being refinanced and extended (five-year reinvestment and four-year non-call); the $615.5 million OZLM Funding IV from June 2013; and Bain Capital Credit’s $519.7 million Race Point IX issued in March 2013.
Approximately $8.6 billion in U.S. CLO refi deals came to market in August, according to Thomson Reuters, and more than $120 billion of U.S. CLO portfolios have been refinanced or reset year-to-date.