Shenkman Capital Management is in the market with its first collateralized loan obligation since the financial crisis.
The Slater Mill Loan Fund is an arbitrage, cash flow CLO that will be backed by $300 million of leveraged loans, according to a presale report by Fitch Ratings. The deal will have a three-year reinvestment period, scheduled to end in August 2015. It includes a $190 million A tranche that Fitch has provisionally assigned an ‘AAA’ rating.
Merrill Lynch, Pierce, Fenner & Smith is the lead arranger.
Fitch said the structure and portfolio concentration limitations of Slater Mill closely resemble those of recently issued CLOs. The deal’s reinvestment period is shorter than the average CLO brought to market this year, which the ratings agency said is a mitigant to Shenkman’s CLO management experience.
Slater Mill will be the second cash flow CLO structure managed by Shenkman. However, Shenkman has 14 years of loan management experience and currently oversees a $2.6 billion leveraged loan portfolio, as of May 31, 2012.
Fitch said the firm’s existing CLO has "exhibited stable performance, maintaining compliance with OC/IC tests through the credit crisis and is currently passing all collateral quality tests."