Golub Capital Partners CLO 54, is set to issue $651.5 million in collateralized loan obligation notes to be secured by senior secured middle-market loans, consisting almost entirely of first-lien, senior secured loans.
Wells Fargo Securities is bringing the transaction to market, with GC Investment Management acting as collateral manager, and the three largest industries represented in the portfolio account for up to 52% of the portfolio balance. Also, the top 10 obligors can represent up to 29% of the aggregate portfolio balance. Wells Fargo Bank as trustee, according to Fitch Ratings.
Similar to other CLOs, Golub 54 has a reinvestment period of four years, with a two-year non-callable period. GC Investment Management is permitted to use principal proceeds to exchange a credit risk obligation for any other credit risk obligation and related equity securities. Certain conditions have to be met, however, like the overcollateralization test being satisfied.
Also, that exchange cannot exceed 10% of the largest initial par amount since the closing date. Fitch, however, says that element could lead to a par erosion as the equity securities from the exchange do not meet the definition of a collateral obligation and would be carried at a zero-principal balance.
Maximum single obligors account for 3% of the Golub 54 pool, and maximum single industry account for 20%. Also, upper limits for second liens is set at 5% of the pool; cov-lite financings will represent no more than 12.5%; and financings to obligors outside of the U.S. will account for just up to 20%.
As far as Fitch’s expected ratings on the four-tier capital structure, the $354.2 million class A is expected to receive a ‘AAA’ rating; the $61.7 million class B notes are expected to be rated ‘AA’, and the $45 million class C notes are expected to receive a ‘A’ rating. The subordinate class D, with $45 million, is expected to receive a ‘BBB’ rating.
