Ares prices $1bn collateralised loan obligation

The CLO, which the firm expects to close by the third quarter, would mark Ares’ third such vehicle in 2017.


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.