Ares Management has priced its latest collateralised loan obligation at $1.1 billion, the firm said on Monday.
The Ares XLIV CLO is primarily made up of broadly syndicated first lien senior secured US bank loans, according to a statement. The firm expects to close the deal by the end of the third quarter, subject to closing conditions.
The firm was not immediately available to comment.
A presale report of the CLO from S&P Global Ratings showed that the transaction’s close could be as early as 17 August. The agency approved a ‘AAA’ rating for the CLO’s $567.5 million senior tranche, consisting of predominantly floating-rate loans carrying an interest rate of three-month LIBOR plus 1.18 percent, the report showed.
The entire transaction will be collateralised by at least 96 percent senior secured loans, with a minimum of 10 percent of the loan issuers required to be based in the US or Canada. The maturity date is set for August 2029.
Ares XLIV allows between 40-90 percent of its loans to be covenant-lite, “dependent on the portfolio's weighted average rating factor and the percentage that does not represent senior secured loans”, the report read.
The deal has a higher total leverage level when compared to similar CLOs the rating agency had analyzed as of the three-month period ending May. The deal had a leverage ratio of 11.92x compared to a 10.11x three-month average for S&P-rated CLOs.
This latest vehicle represents Ares’s third CLO in 2017, according to the statement. With this transaction, Ares now manages more than $13 billion in CLOs in the US and Europe as of the first quarter this year.
Total CLO issuance this year amounts to $48.8 billion in the US and €9.88 billion in Europe, according to CLO-i, a CreditFlux company that tracks CLO data globally. In 2016, some $71.01 billion of CLOs were issued in the US and €16.42 billion in Europe.
Ares had $100 billion of assets under management as of 31 March, according to the statement.