(Updates with additional debt slices in fourth paragraph.)
Oct. 20 (Bloomberg) -- Goldman Sachs Group Inc. is seeking to raise a collateralized loan obligation with a target size of $400 million to be managed by Ares Management LLC, according to three people with knowledge of the deal.
The CLO may include a $254 million piece rated AAA by Standard & Poor’s, said the people, who declined to be identified because the terms are private. Bank of America Corp. priced a $410 million CLO for the Los Angeles-based investment manager in January.
There have been more than $7.6 billion of CLOs backed by widely syndicated loans raised in the U.S. this year, more than double the $3.4 billion raised in 2010, according to data compiled by Bloomberg. At the peak of the market in 2007, $91.1 billion of that type of CLO was issued in the U.S., Morgan Stanley data show.
The Ares fund may also consist of a $23 million slice rated AA, a $40 million piece ranked A, a $21 million portion graded BBB and an $18 million BB piece. There may also be $44 million of equity, the people said. Michael DuVally, a Goldman Sachs spokesman, and Bill Mendel, an Ares spokesman, both declined to comment.
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 S&P/LSTA U.S. Leveraged Loan 100 Index, which tracks the 100 largest dollar- denominated first- lien leveraged loans, has climbed 1.5 cents since September to 90.06 cents on the dollar, the highest level since Aug. 8.
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