Two collateralized loan obligations totaling $887 million from KKR Financial Advisors and Saranac Advisory Ltd. have joined the new issue pipeline.
KKR is planning a $500 million deal backed by a broadly syndicated loan portfolio with a minimum of 90% of the pool consisting of first-lien senior secured loans. Upon the anticipated September closing date, 75% of the portfolio is expected to be ramped.
Moody’s Investors Service assigned provisional Aaa’ ratings to the $306.25 million class A notes that are being marketed at three-month Libor plus 147 basis points. The notes will benefit from an effective subordination of 38.8% and will mature in October 2026.
Credit Suisse Securities is the underwriter.
The deal will have a standard four-year reinvestment period and two-year non-call period.
KKR’s last CLO issuance was in January with $369 million KKR Financial CLO 2013-2. The $100 million class A-1A notes priced at three-month Libor plus 150 basis points. The $10 million, fixed-rate class A-1B notes priced at 3.3599% and the $115 million class A-1C notes priced at a spread of 175 basis points over one-month Libor for the first 12 months, and Libor plus 200 basis points thereafter. Moody’s rated the three class A tranches Aaa.’
KKR Financial Advisors is a wholly owned subsidiary of KKR Asset Management (KAM). KAM has managed CLOs since 2005, currently managing $6.9 billion across 8 CLOs—three of which have been issued since 2012.
Saranacis also back on the CLO scene, readying a $387 million transaction—also backed by a portfolio of primarily first-lien senior secured loans (92.5%), according to Moody’s.
Three tranches of Aaa’ preliminarily rated notes will be issued: the $164 million class-A-1 notes, the $74 million class A-2A notes, and the $11 million class A-2a notes. The A-1 notes are being offered at three-month Libor plus 148 basis points, benefiting from an effective subordination of 41.0%. The A-2A notes are marketed at three-month Libor plus 143 basis points, with a 44.0% effective subordination, and the A-2B notes at three-month Libor plus 170 basis points, benefiting from a 35.7% subordination. The notes will reach final maturity in June 2025.
Jefferies is the underwriter for the deal.
In line with recent CLOs on the market, the transaction has a four-year reinvestment period and two-year non-call period.
Saranac’s last issuance was in April with Saranac CLO II—a $340 million deal. Moody’s assigned the $140.5 million class A-1A notes, the $45 million A-1F notes and the $30.5 million class A-2 notes Aaa’ ratings.
While Saranac will be the manager for the CLO, it will delegate substantially all of its duties under the management agreement to Canaras Capital Management. Canaras is a SEC registered investment advisor that was founded in 2006 and currently manages three CLOs.
