Monroe closes $305m CLO

 The Chicago-based mid-market lender closed its third CLO in the past two years.  

Monroe Capital announced Wednesday (6 July) that it had closed a $305 million collateralised loan obligation. Monroe Capital MML CLO 2016-1 is secured by mid-market senior secured loans and has a four year reinvestment period, according to a statement .  

The transaction will close on 28 July and have a two year non-call period.

Monroe Capital MML CLO 2016-1 matures in 12 years and is structured to be compliant with both US and European risk retention regulation through the manager owned affiliate structure. Monroe has retained the Class E and subordinated debt used in the transaction.

BNP Paribas served as lead manager, structuring agent and bookrunner on the transaction.

In the statement, Monroe president Ted Koenig said that Monroe Capital MML CLO 2016-1 included both new and existing CLO investors.

Seven classes of notes rated Aaa through Ba3 by Moody's / AAA through BBB- by Fitch totaling $255 million and $50 million in subordinated debt were placed in Monroe Capital MML CLO 2016-1. The largest portion of the issuance ($158 million) is in Class A-1 triple A/Aaa rated notes priced at Libor + 225 bps. The rest of the capital structure comprises:

$10 million in Class A-2 triple A/Aaa rated notes with a 3.25 percent interest rate;

$30.75 million Class B double A/Aa2 rated notes priced at Libor plus 330 basis points;

$18 million in Class C A/A2 rated notes priced at Libor plus 450 basis points;

$20.25 million in Class D-1 triple B-/Baa3 rated notes priced at Libor plus 675 basis points;

$3 million in class D-2 triple B-/Baa3 rated notes priced at Libor plus 525 basis points;

$15 million in Class E Ba3 rated notes.

Although overall CLO issuance remains lower than in previous years, Monroe's CLO enters the market amid a number of recent offerings. Last month, DFG Investment Advisors closed a $406 million vehicle and THL Credit Advisors closed a $608 million CLO.

In April, Onex and Wellfleet both closed CLOs and Carlyle's Global Market Strategies closed its first CLO of 2016 on $403 million. Carlyle executives, speaking on the firm's first quarter earnings call, cited opportunities created by regulatory pressure as reasons for expanding its CLO business. 

Monroe provides senior and junior debt to mid-market companies in the US and Canada.  The firm was founded in 2004 and has about $3.2 billion in capital under management. Based in Chicago, Monroe also maintains offices in New York, Los Angeles, San Francisco, Atlanta, Boston, Charlotte, Dallas and Toronto.