Maranon Loan Funding 2023-2 Ltd. is issuing a $396.6 million middle market CLO managed by Maranon Management LLC, a subsidiary of Maranon Capital L.P.
The transaction is Maranon Management's second CLO in 2023, which will bring its total CLO assets under management (AUM) to approximately $3 billion, according to S&P Global Ratings. Currently, Maranon Management manages six CLOs and has around $2.6 billion in total CLO AUM.
The closing date for the deal was December 21, 2023.
The transaction is collateralized by at least 95% senior secured loans, cash, and eligible investments, S&P says. Of the identified underlying collateral obligations, 82.28% have credit ratings assigned by S&P. Of the identified underlying collateral obligations, 1.26% have recovery ratings assigned by S&P.
The transaction has total leverage of 7.89 compared to a 9.54 three-month average comprising transactions rated by S&P during the quarter ending October 31, 2023, and a weighted average cost of debt of 3.52%. The transaction's weighted average cost of debt compares to a three-month average of 2.46%, S&P says.
The collateral manager is Maranon Management, the initial purchaser was SG Americas Securities, and the trustee is U.S. Bank Trust Co. N.A.
S&P assigned provisional ratings of AAA to the class A-1 and A-2 notes, AA to the B notes, A- to the C notes, BBB- to the D notes, and BB- to the E notes.
The C, D, and E notes are deferrable. S&P didn't rate the variable dividend notes.
S&P said its ratings are based on the diversification of the collateral pool, which consists primarily of middle market speculative-grade (rated BB+ and lower) senior secured term loans; the credit enhancement provided through subordination, excess spread, and overcollateralization; the experience of the collateral manager's team; and the transaction's legal structure, which is expected to be bankruptcy-remote.
