Sound Point Capital Management is back on the collateralized loan obligation scene with a $500 million deal, according to a presale report published by Fitch Ratings.
Net proceeds from the deal, Sound Point CLO VI, will be used to purchase a portfolio of primarily leveraged loans. The indicative portfolio includes 125 loans from 118 high-yield obligors, and consists of 98.6% first lien, senior secured loans.
Moody’s assigned preliminary Aaa’ ratings to two of the eight tranches issued by Sound Point: the $305 million class A-1 notes and the $20 million class A-2 notes. Both classes benefit from a credit enhancement of 35.0% and reach final maturity in 2026.
The reinvestment period and non-call period are in line with recent CLO issuances—four years and two years, respectively.
The arranger for the deal is Morgan Stanley & Co.
Sound Point’s last CLO deal was in March of this year when $600 million Sound Point CLO V was issued. The transaction is backed primarily by a pool of broadly syndicated, senior secured corporate loans—92.5% of which must be first lien senior secured loans. Moody’s Investor’s Service assigned the $390 million class A floating-rate notes Aaa’ ratings. The notes were offered at 157 basis points over three-month Libor and benefit from a credit enhancement of 35.0%.
As of October 1, 2013, Sound Point Capital had $2.7 billion in assets under management. Product line includes separately managed accounts, three CLOs. A floating rate fund, and a credit opportunities fund. The company was established in 2009 and currently has offices in New York.