Global distressed debt fund manager King Street Capital Management is issuing its first collateralized debt obligation ever.
The $507 million Rockford CLO 2017-1 deal will be managed by King Street’s newly established majority-owned affiliate, Rockford Tower Capital Management. Fitch has assigned a provisional ‘AAA’ rating to the $319.8 million senior tranche. The interest rate is yet to be determined.
The indicative portfolio consists of 115 loans from 105 high-yield, speculative-grade borrowers – with 13.3% of the loans concentrated in the telecom corridor, according to Fitch's presale report.
The deal has a four-year reinvestment peroid, which has become fairly standard. More established CLO managers have been able to negotiate reinvestment periods from 4.5 to
Rockford has structured the deal to comply with risk-retention rules in both the United States and European Union.
One such deal receiving a five-year reinvestment period is the second CLO of the year for manager CIFC CLO Funding. Fitch on Thursday published the presale for CIFC Funding 2017-II, a $511 million transaction that includes a $315 million ‘AAA’ tranche. The senior notes series carries a 37% credit enhancement and an assumed coupon of 130 basis points over Libor.
The residual notes total $48 million.
Two other new-issue CLOs were announced by ratings agencies on Tuesday, although they were primarily refinancings of older CLOs repackaged into 2017 vintage structures.
Mercer Field II CLO is an $875 million portfolio of broadly syndicated loans managed by Guggenheim Partners Investment Management LLC. According to Morningstar Credit Services, the majority of the assets are loans that will be required from the legacy Mercer Field CLO that was closed in December 2012.
The AAA-rated tranche has $560 million in notes backed by senior loans, priced at 133 basis points over Libor and a 36% subordination level. The new deal will include a four-year reinvestment period and a weighted average life of 8 years.
CIFC intends to be in compliance with both Europe and U.S. risk retention.
Citigroup was the lead arranger, with the transaction expected to close March 27.
Moody’s Investors Service on Tuesday assigned ratings to two new classes of notes for NewStar Commercial Loan Funding (NCLF) 2017-1, which are being added to outstanding notes from the asset manager’s former NCLF 2013-1 transaction.
Moody’s assigned triple-A ratings to a new $207 million senior-note tranche and a $25 million replacement-note tranche. The notes have been issued along with four other classes of replacement notes that altogether refinanced eight older classes of notes from the September 2013 deal. All eight classes of notes from the older deal will be redeemed.
Moody’s stated the CLO is being modified with an extension of its non-call and reinvestment periods, as well as its weighted-average life test and the stated maturity of the notes. Other changes included new concentration limits impacting second-lien loans and single obligors.
