GoldenTree Asset Management’s latest CLO will allow for up to 40% of its holdings to be invested in bonds, a large portion atypical of CLOs.
The $590 million CLO, GoldenTree Credit Opportunities 2012-1, must have at least 50% of its portfolio invested in senior secured loans, senior secured floating-rate notes or other similar investments. But it can have as much as 40% in corporate bonds, second-lien loans or unsecured loans, according to a Moody’s Investors Service report.
The bond allowance is about four times higher than the maximum for a normal CLO, which usually allows between 5% and 10% of its investments to be put towards bonds.
Bank of America Merrill Lynch arranged the CLO. So far it has $245 million in Class A-1 senior secured floating-rate notes due 2024, $41 million in Class A-2 senior secured fixed-rate notes due 2024, $49 million in Class B-2 senior secured floating rate notes due 2024 and $15 million in Class B-1 senior secured floating-rate notes due 2024. The fixed rate and floating rate tranches are rated Aaa and Aa2, respectively, by Moody’s.
Representatives of GoldenTree and Bank of America were not immediately available for comment.
In April, Bank of America arranged a $526.8 million CLO managed by GoldenTree.
New York-based GoldenTree has $15.9 billion in assets under management