American Capital closes $411m CLO

The investment vehicle is structured to meet European regulatory requirements.

American Capital unit ACAS CLO 2014-2 closed a $411 million collateralised loan obligation earlier this week, according to a statement by the firm. ACAS CLO 2014-2 is managed by American Capital’s portfolio company, American Capital Asset Management (ACAM).

The transaction was arranged by Wells Fargo and complies with European risk retention rules.

The CLO is mainly made up of syndicated senior secured floating rate loans sourced from both the primary and secondary markets. ACAM will charge an annual management fee of 50 basis points on total assets, the statement continued.

“We are pleased to announce our fifth CLO transaction post the credit crisis and our sixth overall. We are delighted to have again acted as a retention provider in accordance with European risk retention requirements, allowing us to continue to attract repeat as well as new European investors to our CLO platform,” said Mark Pelletier, president of American Capital CLO Management and president and chief investment officer of the firm’s business development company.

Broken down into classes the CLO comprises $226 million in class A-1 notes, rated ‘AAA’ by Moody’s and Fitch and paying Libor plus 1.6 percent; $36 million class A-2 rated ‘AAA’ paying a coupon of 3.634 percent; $30 million ‘Aa2’ rated class B-1 notes paying Libor plus 2.2 percent and $6 million ‘Aa2’ class B-2 notes paying a coupon of 4.551 percent. Class C notes total $27.2 million and are rated ‘A2’ by Moody’s with a spread of Libor plus 3.2 percent. The $24 million class D notes are rated ‘Baa3’ and pay Libor plus 3.9 percent. The class E notes are rated ‘Ba3’, total $20.8 million and pay Libor plus 5.75 percent. The investment vehicle’s capital structure includes $40.796 million in equity.

The private equity firm and asset manager now manages around $2.8 billion of loans via six CLOs and its BDC, American Capital Senior Floating.