Both Par Four Investment Management and Cutwater Asset Management are stepping onto the collateralized loan obligation scene; Par Four with its first CLO of the year and Cutwater with its first in company history, according to presale reports from Moody’s Investors Service.
Par Four is preparing its third CLO, the $450 million Tralee CLO III. The deal is backed by a broadly syndicated loan portfolio consisting of only corporate debt, with a minimum of 90% first-lien senior secured loans and eligible investment.
Six tranches of notes will be offered, including two tranches of Aaa’ preliminarily rated class A notes. The $150 million class A-1 notes will be marketed at three-month Libor plus 159 basis points and the $128 million class A-2 notes at three-month Libor plus 150 basis points. Both benefit from an effective subordination of 38.2%.
The notes are non-callable until July 2016 and have a four-year reinvestment period.
The underwriter for the deal is Deutsche Bank Securities.
Par Four Investment Management’s last deal, $376.5 million Tralee CLO II was completed in March 2013. Eight tranches of notes were issued, including a $250 million class A tranche marketed at three-month Libor plus 118 basis points, which received Aaa’ ratings from Moody’s.
Founded in 2003 as an independent alternative investment asset manager, Par Four Investment Management is based in Woodcliff Lake, New Jersey. Par Four manages two other CLOs, with a combined principal balance of $750 million.
Cutwater Asset Management’s deal, Cutwater CLO 2014-1, will be backed by a $400 million pool of broadly syndicated loans. The portfolio also consists of only corporate debt. Cutwater expects 65% of the portfolio to be ramped at closing.
Seven tranches of notes will be issued, including two Aaa’ preliminarily rated classes. The $216.6 million class A-1a notes are being marketed at three-month Libor plus 152 basis points, while the $45 million class A-1b notes are offered at three-month Libor plus 136 basis points. Both Aaa’ provisionally rated classes have an effective subordination of 34.6%.
The deal, like Tralee CLO III, has a standard two-year non-call period and a four-year reinvestment period.
Natixis Securities Americas is the underwriter for the transaction.
Cutwater Asset Management, formerly known as MBIA Asset Management., is an SEC registered independent subsidiary of insurer MBIA Inc., founded in 1991. As of December 31 2013, the firm had approximately $23.9 billion in assets under management, of which 53% is managed for third-party clients and the remainder is managed for MBIA Inc.