Voya Investment Management is readying its third collateralized loan obligation of the year—and this one feature a tranche of fixed-rate notes, according to a presale report published by Moody’s Investors Service.
The $500 million deal, Voya CLO 2014-3, will be backed by a pool of broadly syndicated corporate loans. A minimum of 90% of the portfolio will be comprised of senior secured loans and eligible investments. Approximately 75% of the portfolio is expected to be ramped at closing.
Moody’s assigned a preliminary Aaa’ rating to the $320 million class A-1 notes that will be offered at three-month Libor plus 142 basis points and benefit from effective subordination of 36%.
While most CLOs issue only floating-rate notes, 2.4% of Voya CLO 2014-3’s notes will pay a fixed interest rate. The $12.5 million class A-2B notes, with an effective subordination of 22.75%, will be offered at 4.20%. Moody’s noted in the presale report that this could lead to a mismatch between the amount of interest paid on floating-rate loans in the CLO’s portfolio and the interest paid out on the fixed-rate notes.
The deal has a standard two-year non-call period and four-year reinvestment period.
Bank of America Merrill Lynch is the underwriter.
The last Voya CLO transaction was issued in June—Voya CLO 2014-2. Net proceeds from the issuance will be used to purchase a portfolio of approximately $500 million of leveraged loans. According to a presale report published by Fitch Ratings, the $320 million class A notes received AAA’ provisional ratings, offered at 145 basis points over three-month Libor. The notes benefit from a credit enhancement of 36%.
Voya Investment Management, formerly known as ING Alternative Asset Management, is a global asset manager. As of January 2014, the company had approximately $201 billion in total assets under management across all portfolios and strategies. It currently manages more than $17 billion of secured loans, including 16 cash flow CLOs.
