GoldenTree closes $711m CLO

The deal is the firm's first since US risk retention requirements kicked in for CLO managers.

GoldenTree Asset Management has closed its first collateralised loan obligation of the year after raising a $600 million fund dedicated to CLOs, the company said on Wednesday.

The GoldenTree Loan Management US CLO-1 closed on $711 million, backed by a $670 million ramp-up of senior secured loans, according to a statement.  The CLO has a four-year investment period and two-year non-call period.

On Wednesday, the company said that a bank syndicate – with Morgan Stanley as lead, Bank of America Merrill Lynch and Wells Fargo as co-leads and GreensLedge as placement agent – arranged the GLM US CLO-1. The syndicate distributed the CLO’s investment grade notes, issuing $429 million of ‘AAA’-rated senior notes with a coupon of LIBOR plus 1.22 percent.

GLM started raising capital for its CLO last May, according to Securities and Exchange Commission filings. The strategy had raised $600 million as of this January, surpassing an initial target of $500 million, as Private Debt Investor reported

The vehicle’s investors included at least 20 insurance companies, corporate and public pension funds, sovereign wealth funds and family offices from the US, Europe and Asia, a statement from January showed.

GLM said the CLO is the first risk-retention compliant vehicle under its new CLO strategy. The SEC now requires every lead arranger of a CLO to retain a minimum of 5 percent of the face value of the vehicle, an effort to align the interests of the fund’s managers with investors. The rules went into effect 24 December. 

GoldenTree invested in the CLO’s equity and lower rated notes, issuing lower rated senior, mezzanine and junior notes, which have an overall weighted average floating rate coupon of LIBOR plus 1.74 percent.

The CLO also issued $18 million AA-rated fixed rate notes with a coupon of 3.79 percent.

The firm was not immediately available to comment.

With the closing of this latest CLO, GoldenTree has issued over $11 billion of CLOs, with over $5 billion currently outstanding, the company said.

The CLO strategy is part of the asset manager’s structured credit arm, on top of RMBS and ABS products. The structured credit strategy seeks single digit net returns, according to its website. GoldenTree currently manages over $3 billion of structured credit investments.