New York Life Investment Management (NYLIM), an asset management firm headquartered in New York, follows a diverse multi-asset class platform in order to maximize returns for its investors.

Formed in 2000 as a subsidiary of New York Life to consolidate the insurance parent's various investment capabilities, NYLIM allows for a focus not only on assets of the insurance parent, which has been investing in bank loans since 1994, but also on third party accounts. "Since the formation of NYLIM was have [focused on third party accounts] to a significant extent within this asset class. We are one of many dedicated investment teams within this integrated multi-asset class platform," said Rob Dial, managing director and head of the leveraged loan group at NYLIM.

Earlier this summer, NYLIM closed Flatiron 2006, a $618 million pool of assets primarily composed of non-investment grade floating rate bank loans, thereby marking the firm's fourth CLO deal since 2003. Since its inception, NYLIM has closed a total of five CLOs, which include the Enhanced Loan Fund 3 - a synthetically funded structure and the firm's first CLO - as well as four more traditional-cash funded structures, Flatiron 2003, 2004, 2005 and 2006.

"We have averaged about one deal per year," Dial said.

While Dials does not expect to print another deal this year, there is a possibility that NYLIM could open warehouse to ramp another transaction, he said. "We are always considering what to do next," he said. "I think if we print another deal it will be a 2007 event and I think we will do probably one deal or possibly two."

The firm is unique in its multiple portfolio management style, Dial said. Currently NYLIM supervises mutual fund money under the MainStay Investments family of funds, the proprietary mutual fund company owned by the firm. NYLIM also manages CLO money for institutional investors that want to leverage investment profile, unlevered institutional accounts for institutional investors that want an unlevered profile, and general account money for their parent New York Life.

"We have a broad variety of portfolios under management and we have a broad variety of funding streams so we do not have to issue CLOs just to cover overheard," noted Dial, who felt that issuance was contingent upon market conditions being conducive to the launch of a deal. "It is more important to our firm to issue CLOs when the environment is right and issue them with structures that make sense over a longer period of time with a potential variety of market conditions so that they will be successful."

Over their last four deals, Dial explained that liability costs in the market have declined significantly, and there has also been a notable change in credit quality. "We have gone from a market where the predominance of issue was in the low double-B credit range, BB-' or Ba3', to a market where the average credit quality is a B1' or B+'. By virtue of average credit quality, one could judge that there is more risk in just about every transaction being done today, as one would expect in an environment with low defaults and significant demand for product.

For the next few months, Dial does not foresee any substantial changes to the current market conditions. "For the balance of 2006, it will likely be an environment where the default picture is very similar to what we have today," he said. "The outlook is more questionable for 2007."

Dexterous team players

NYLIM's management team takes a multifaceted role in the firm's investment strategies. Along with his involvement in fixed income investments, Anthony Malloy, who has taken on the position of senior managing director and head of NYLIM's fixed income investors group, currently maintains a position as portfolio manager for the MainStay floating rate fund as well as co-managing, with Dial, the retail and institutional leveraged loan funds. Dial noted that somebody like Malloy who "has a background in loans and believes in the merits of the loan asset class, is an important ingredient for success." Malloy currently oversees more than $100 billion in fixed income investments including high yield bonds, investment grade corporate bonds, bank loans, private placements, emerging markets, project finance, and asset-backed securities.

NYLIM's managers all come to the firm with solid experience in their market sector. Brian Murdock, president and CEO of NYLIM, joined the firm two years ago after 25 years with Merrill Lynch Investments. Murdock assumed responsibility for all NYLIM divisions and subsidiaries, including the orchestration of several strategic growth initiatives including the acquisition of Institutional Capital Corp., the creation of the firm's quantitative investment platform (equity investors group), and the restructuring of MainStay funds distribution channels.

More recent appointments include Michelle Lim who joined the team in July, was previously at Katonah Capital and Arthur Torrey, who joined NYLIM in April, coming over from The Carlyle Group. Dial emphasized that the influence of these new appointments is only "further indication of this firm's dedication to this asset class."

(c) 2006 Asset Securitization Report and SourceMedia, Inc. All Rights Reserved.

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