RREEF America, the real estate investment unit of Deutsche Asset Management, is securitizing an unusual mix of speculative-grade project finance and corporate in a debut $431.3 million collateralized debt obligation.

RIN Ltd., the name of the managed project finance CDO, is backed by a revolving portfolio of syndicated project finance loans and investments that are used primarily to fund utility and infrastructure projects, according to a presale report from Moody's Investors Service. The loans cover both construction or operational phases of projects.

The portfolio represents the first-ever loan securitization by RREEF.

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The notes being issued include a $262 million Class A tranche carrying an Aaa rating from Moody’s. The bonds, priced at Libor plus 150 basis points, benefit from a 39.3% effective subordination of the $49.6 million series of Class B notes (rated Aa3), the $55 million in Class C notes (Baa3) and an unrated tranche of preferred shares totaling $64.7 million, or 15% of the capital structure, that will be retained by RREEF.

Barclays is the underwriter.

Although 95% of the portfolio will consist of senior-secured loans, the deal is structured as a CDO as at least 60% of the portfolio’s par amount is required to be project-finance loans. Moody’s rates project finance debt under CDO methodology, under which many projects receive an elevated debt rating when transitioning from construction to the operational phase, according to the agency’s ratings methodology.

No more than 30% of the revolving portfolio can be consigned to construction loan assets at any time. RREEF will purchase and trade loans through the traditional CDO/CLO primary and secondary markets.

All loans in the portfolio will be from speculative-grade rated issuers. The transaction provides for a two-year noncall period on the pool and a four-year reinvestment period. RREEF will acquire and trade loans through the traditional CLO primary and secondary markets.

RREEF America is an infrastructure debt specialist with $20 billion in assets under management.

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