New York Life Investment Management is preparing to issue a $409 million collateralized loan obligation called Flatiron CLO 2013-1, according to a presale report from Fitch Ratings.
Merrill Lynch, Pierce, Fenner & Smith is the arranger.
A portion of the net proceeds from the issuance of notes will be used to repay parties that provided interim financing, allowing the issuer to purchase collateral prior to the closing date. The remainder of net proceeds will be used to purchase assets to reach a target portfolio of approximately $400 million of leveraged loans. The CLO will have a four-year reinvestment period.
The deal includes $250 million of notes with a preliminary rating of ‘AAA’ that benefit from credit enhancement of 37.3%, which Fitch said is in line with the average for recently issued senior notes of CLOs. It is being marketed at Libor plus 140 basis points.
However, the 23.4% credit enhancement on a $55.57 million class of notes rated ‘AA’ is below the average of similar CLO issuances. It is being marketed at Libor plus 190 basis points.