Antares preps for $2.1bn CLO close

The Canada Pension Plan Investment Board-backed firm hired a head of structured products in February 2016 to oversee its resurrected CLO business.  

Antares Capital is expected to close the largest post-financial crisis collateralised loan obligation later this month, bursting back into a business the Chicago-based firm exited over a decade ago.

Standard & Poor’s pre-sale report expects the $2.1 billion deal backed by mid-market will close 18 May; another such report by Moody’s anticipates that date will be no later than October.

The deal requires that the CLO be collateralised by a minimum of 92.5 percent senior secured loans, and that at least 90 percent of loan issuers be based in either the US or Canada, the S&P document showed. Up to one-quarter of the loans can be covenant-lite.

The top tranche of notes, $1.04 billion of AAA-rated securities priced on 17 April, garnered an interest rate of three-month LIBOR plus 1.725 percent, the report showed. The document also said the reinvestment period ends in July 2021 and matures seven years later.

Assets must be a senior secured loan, a first lien last out loan or a second lien loan and denominated in US dollars. They cannot be a bridge loan, real estate loan or structured finance obligation, according to the Moody’s document.

Antares, which declined to comment on the deal, hired Vivek Mathew as head of structured products in February 2016, a key hire after Canada Pension Plan Investment Board acquired the mid-market lender from GE Capital in August 2015.

As the largest CLO since the Great Recession, the Antares CLO is notable for its size, as it could contribute substantially to the year’s overall issuance. A plurality of arrangers and managers surveyed by Thomson Reuters (provided to industry newsletter The Lead Left), about 45 percent, expected issuance for the year to be between $55 billion to $60 billion, of which $2 billion would come from one deal. With $17.34 billion issued in the first quarter though, issuance could be on track to near $70 billion.