Resource Capital is putting together a CLO that may be completed in the fourth quarter.
The real estate investment trust formed the CLO in June and began warehousing collateral in with financing from Citigroup, Christopher Allen, senior vice president of leveraged loans, said during a conference call to discuss earnings.
At the end of June, the CLO had purchased $48 million in bank loans through the facility, which bears an interest rate of Libor plus 100 basis points.
Allen said the new issue CLO market has became more attractive. “For the first time in several quarters, secondary loan prices have declined in price, while liability spreads have remained tight,” he said.
Resource Capital intends to purchase the majority of the equity in the CLO when the transaction closes.
Allen also said Resource Capital is also considering acquiring other CLO managers. “Going forward we believe that the trend of manager consolidation will continue and that Resource Capital will be a major beneficiary,” he said. “We regularly review additional acquisition candidates.”