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Guggenheim marketing first-ever middle-market CLO

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Guggenheim Partners Investment Management has invested $11.7 billion in middle-market leveraged loans over the past 16 years.

But only now is the investment firm churning these small and midsize enterprise assets into a middle-market CLO securitization, according to presale reports from Fitch Ratings and S&P Global Ratings.

Guggenheim MM CLO 2018-1 is a $402.5 million portfolio containing a collateral pool of 78 loans from 60 primarily middle-market obligors. The deal is the first-ever middle-market collateralized loan obligation sponsored by the firm, according to S&P, as well as the first overall CLO issued this year by Guggenheim, a regular issuer of open-market CLOs since 2002.

Guggenheim joins GSO/Blackstone and Bain Capital as other first-time middle-market CLO issuers this year.

The transaction joins the newly launched Barings Middle Market CLO Ltd. 2018-I and Monroe Capital MML CLO VII that closed this week as the only SME CLOs to enter the middle-market CLO field for November, according to presale reports and company press releases.

They add to a year-to-date issuance of middle-market CLOs totaling $13 billion, according to Reifinitiv. (Total middle market loan issuance for 2018 stood at $134.2 billion through the third quarter.)

Guggenheim’s CLO, being placed by Natixis, will have an approximately 4.1-year reinvestment period and a 2.1-year noncall period. The deal is expected to carry a 155 basis point senior-note spread when it closes in December, according to Fitch Ratings and S&P.

Barings, a subsidiary of Massachusetts Mutual Life Insurance Co., is sponsoring its second middle-market CLO in a follow-up to its November 2017 debut transaction. The deal, also placed by Natixis, is expected to price with a triple-A note spread of 153 basis points over Libor.

After the fully identified portfolio is accumulated, Barings is targeted to have a 14% concentration of loans in the aerospace and defense industries, according to presale reports form Fitch and Morningstar.

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