Golub Capital Partners is close to launching a $250 million middle-market CLO, arranged by Wells Fargo, according to a report from Moody’s Investors Service.
The transaction, Golub Capital Partners CLO 12, is the firm’s second CLO in the space of four months. It priced Golub Capital CLO 10, a broadly syndicated deal jointly arranged by Wells Fargo and Mitsubishi UFJ, in September.
Notably, the new CLO provides 42.4% subordination to the triple-A tranche, which is significantly lower than on a couple of recent middle-market deals: Ivy Hill Middle Market III and TICC CLO, which provided roughly 54% credit protection to the triple-A tranche.
Moreover, the lower subordination level has not been reflected in higher coupons. The $144 million triple-A tranche is priced at Libor plus 200 bps, the same as the Ivy Hill deal. A $17.5 million double-A tranche is priced at Libor plus 400 bps; while a $19 million single-A tranche pays Libor plus 575 bps. The remaining roughly $70 million is CLO equity.
At least 95% of the collateral pool will consist of senior secured loans, with the remainder made up of second-lien loans, according to Moody’s. Investment in any other type of asset will not be permitted. The new CLO will have a legal maturity of 10 years. It will also have a three-year reinvestment period and a two-year non-call period.