Bloomberg News

Goldman Said to Raise $430 Million CLO for Ares Management

February 09, 2012

Feb. 8 (Bloomberg) -- Goldman Sachs Group Inc. raised a $430 million collateralized loan obligation for Ares Management LLC, according to two people with knowledge of the deal.

The fund, Ares XXIII CLO, includes a $270.9 million slice rated AAA by Standard & Poor’s that pays interest at 150 basis points more than the London interbank offered rate, said the people, who declined to be identified because the terms are private.

Four CLOs totaling $1.7 billion backed by widely syndicated loans have been raised in the U.S. this year, according to data compiled by Bloomberg. There were $11.7 billion of such funds raised last year. Royal Bank of Scotland Group Plc expects CLO issuance of $12 billion to $14 billion this year, excluding refinancings.

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.

Michael DuVally, a Goldman Sachs spokesman, and Bill Mendel, a spokesman for Los Angeles-based Ares, declined to comment.

Spreads on CLO AAA slices have tightened since Goldman began marketing the fund last year. The last CLO sold in 2011, a $415.2 million fund for CIFC Corp., included a $275.3 million AAA portion that has a coupon of 165 basis points more than Libor. A basis point is 0.01 percentage points.

JPMorgan Chase & Co. reduced its AAA spread forecast to 125 basis points more than Libor, according to a Feb. 3 report. Libor is the rate at which banks say they can borrow in dollars from each other.

“CLO spreads are tighter across the structure and globally,” analysts led by Rishad Ahluwalia wrote in the report. “We think there is some room left for CLO spread tightening, but this will depend on market performance of underlying leveraged credit.”

Leveraged loan prices reached a year high yesterday of 93.45 cents on the dollar, as measured by the S&P/LSTA U.S. Leveraged Loan 100 Index, the highest level since Aug. 3.

--Editors: Faris Khan, Chapin Wright

To contact the reporter on this story: Kristen Haunss in New York at

To contact the editor responsible for this story: Faris Khan at

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