Elmwood Asset Management is offering a $401.8 million collateralized loan obligation (CLO), the Elmwood CLO 22. The deal is secured by senior secured corporate loans, with a lower weighted average (WA) cost of debt, higher leverage and higher subordination compared with the three-month average.
Assets in both the U.S. and Canada will secure the transaction, which will bring Elmwood's total assets under management to $13.0 billion, according to a pre-sale report from S&P Global Ratings. As for its key credit metrix, the deal's total leverage is 11.25%, subordination is 13.14%, it has a WA cost of debt of 2.35%, and a WA spread of 3.49%, excluding floors.
Citigroup Global Markets is the deal's initial note purchaser, which is slated to come to market in a little over a week, S&P said. The highly diversified portfolio has about 314 obligors, where the average obligor holds 0.32% of the portfolio's assets, while the largest accounts for just 0.87%.
Those obligors span a range of industries, the largest being healthcare providers and services. Hotels, restaurants and leisure follow that industry concentration, then capital markets, healthcare technology and hotels, restaurants and leisure that round out the top five industries.
What is excluded from the deal, however, prohibits a number of industries, including coal mining or coal-based power generation, palm oil production, adult entertainment or tobacco, according to S&P.
All of the notes benchmarked off of the three-month term Secured Overnight Financing Rate (SOFR), with interest rates that range from 180 basis points over on the class A certificates to 650 bps over the SOFR on the class F notes. Overcollateralization ranges on the notes from 156.25% on the class A notes to 108.40% on the class F tranche, the rating agency said.
S&P isn't expected to assign ratings to the class A notes. As for the rest of the deal, however, the rating agency expects to assign 'AA' ratings to the class B notes; 'A' to the class C notes; 'BBB-' to the class D notes; 'BB-' to the class E notes; and 'B-' to the class F notes.
