Bloomberg News

Morgan Stanley Said to Raise $461.3 Million Apollo CLO

June 09, 2011

(Updates with debt pieces in fifth paragraph.)

June 9 (Bloomberg) -- Morgan Stanley raised a $461.3 million loan fund to be managed by Apollo Global Management LLC, according to a person with knowledge of the deal.

The collateralized loan obligation, ALM IV, includes a $274.5 million piece rated AAA by Standard & Poor’s that pays 124 basis points more than the London interbank offered rate, said the person, who declined to be identified because the terms are private.

The new fund brings CLOs backed by widely syndicated loans issued this year to more than $4 billion, according to data compiled by Bloomberg. Banks sold more than $3.4 billion of the debt in the U.S. last year, more than double the $1.22 billion in 2009, according to Bloomberg and Morgan Stanley data.

CLOs are a type of collateralized debt obligation that pool high-yield, high-risk loans and slice them into securities of varying risk and return.

The Apollo fund also includes a $58.5 million slice rated AA that pays a rate of 190 basis points more than the benchmark; a $29.8 million portion graded A; a $20.3 million piece rated BBB; and a $23.6 million segment rated BB, the person said. It also has $11.3 million of unrated debt and $43.4 million of subordinated notes.

Mary Claire Delaney, a Morgan Stanley spokeswoman, declined to comment. Charles Zehren, a spokesman for Apollo, didn’t immediately return a telephone call seeking comment.

--Editors: Chapin Wright, Mitchell Martin

To contact the reporter on this story: Kristen Haunss in New York at khaunss@bloomberg.net

To contact the editor responsible for this story: Faris Khan at fkhan33@bloomberg.net


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