Sankaty Advisors Readies $412.5M Collateralized Loan Obligation-Source


20 April 2012

NEW YORK (Dow Jones)--Sankaty Advisors, the credit affiliate of Bain Capital, has issued price guidance on a $412.5 million collateralized loan obligation, according to a person familiar with the transaction.

CLOs are investment vehicles that bundle loans together and sell pieces of the deals, weighted by their risk levels, to investors as securities.

The deal, being arranged for Sankaty by Bank of America Merrill Lynch, is called Race Point VI CLO and is set to price the week of April 30, according to the person familiar with its terms.

A spokesman for Sankaty did not immediately return a request for comment.

Price guidance on the top-rated, AAA piece is in the area of 130 basis points over the three-month London interbank offered rate, a benchmark for lending rates between banks, the person familiar added.

The Sankaty deal follows a spate of recent CLOs issued by other managers. A pair of asset managers, Symphony Asset Management and NXT Capital, priced close to $1 billion of CLOs Thursday. Symphony was arranged by Bank of America and NXT's deal was via Wells Fargo and BMO Capital Markets.

Royal Bank of Scotland strategists have doubled their predictions for CLO issuance this year. An earlier prediction of $12 billion-$14 billion issuance in 2012 "may have been a bit low," said strategists at the bank in a note. Strategists at Credit Suisse also raised its issuance forecasts for this year to $25 billion.