Z Capital Credit Partners closed its debut collateralised loan obligation (CLO) this week, the firm said.
The $400.75 million vehicle, Z Capital Credit Partners CLO 2015-1, will be managed by the firm’s affiliate, Z Capital CLO Management.
The new vehicle is backed by a pool of US syndicated loan market paper rated between AAA/Aaa (S&P/Moody’s) to B (S&P). It has a four-and-a-half-year reinvestment period and was structured to comply with European risk retention rules. To achieve this, Z Capital Credit Partners will retain the majority of the $35 million of subordinated notes.
The AAA/Aaa-rated A-1 note class totals $243 million of paper with another $6 million of A-X class notes bearing the same triple-A rating. Below that class the B through F note classes are much smaller, ranging from $5.25 million (F class rated B) to $48.5 million (AA-rated B class notes).
“We are pleased that our inaugural CLO received strong support, representing a successful debut offering for Z Capital Credit Partners,” said James Zenni (pictured), president and chief executive as well as founder of Z Capital. “The level of investor interest speaks to our principals’ track record in CLO and broadly syndicated bank loan management, our robust credit platform and the expertise of the team at Z Capital Credit Partners.”
Last year, regulators announced risk-retention rules for the US CLO market requiring ‘skin in the game’ of approximately five percent of the vehicle’s assets. This is expected to limit the number of first-time CLO managers that can establish themselves.
Z Capital’s CLO is the first transaction executed by a new manager in 2015, the firm said.
Z Capital Credit Partners, the credit arm of Z Capital Group, invests in senior secured debt and other credit opportunities with security or other forms of downside protection.
Z Capital Group was formed in November 2006. It is a global alternative investment manager with around $2.3 billion in assets under management and offices in New York, Lake Forest, Illinois, and Zurich.