Bank of America Corp. (BAC:US) raised a $526.8 million collateralized loan obligation for GoldenTree Asset Management LP, according to four people with knowledge of the deal.
The fund, GoldenTree Loan Opportunities VI, includes a $313 million slice rated AAA by Standard & Poor’s that pays a rate of 130 basis points more than the London interbank offered rate, said the people, who declined to be identified because the terms are private.
There have been $6.1 billion of CLOs backed by widely syndicated loans sold this year, up from $1.2 billion issued during the same time period last year, according to data compiled by Bloomberg. That compares with $91.1 billion of CLOs raised at the height of the market in 2007, according to Morgan Stanley data.
GoldenTree’s CLO is the largest backed by widely syndicated loans to be raised this year, according to Bloomberg data. It was upsized from $419.1 million, two of the people said.
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 fund also has the tightest interest rate on the highest-rated portion of a deal issued this year, according to the data. A $388.5 million fund issued by Symphony Asset Management LLC in January had pricing of 155 basis points more than the benchmark.
Kerrie McHugh, a Bank of America spokeswoman, declined to comment. GoldenTree representatives didn’t return a call seeking comment.
JPMorgan Chase & Co. predicts new-issue AAA CLO spreads will drop to 125 basis points more than the benchmark this year, according to a Feb. 3 report. Libor is the rate at which banks say they can borrow in dollars from each other. A basis point is 0.01 percentage point.
The price of the underlying loans has been rising, with the S&P/LSTA U.S. Leveraged Loan 100 Index (SPBDLLB) reaching a high this year of 93.84 cents on the dollar on March 28. The measure closed at 93.65 cents yesterday.
Leveraged loans are those rated below BBB- by S&P and less than Baa3 at Moody’s Investors Service.
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