Citigroup Inc. (C) is raising a $408.8 million collateralized loan obligation for Babson Capital Management LLC, according to a person with knowledge of the deal, who declined to be identified because the terms are private.

The fund may includes a $255 million slice rated AAA by Standard & Poor’s, according to a report from the ratings company.

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.

David Coburn, a spokesman for Charlotte, North Carolina, Boston and Springfield, Massachusetts-based Babson, and Scott Helfman, a spokesman for New York-based Citigroup, declined to comment.

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