A unit of Credit Suisse Group AG (CS:US) is planning to raise a more-than $800 million collateralized loan obligation to invest in junk-grade corporate debt, according to a person with knowledge of the transaction.
Credit Suisse Asset Management may sell the CLO as soon as next week, said the person, who asked not to be identified because the deal is private. The Zurich-based bank is also underwriting the transaction, the person said.
As much as $80 billion of CLOs may be raised this year in the U.S., surpassing the $55 billion of issuance in 2012, according to Wells Fargo & Co. The bank originally estimated the funds, which fueled the 2005-2007 buyout boom, would raise only $12 billion last year after struggling to rebound in the wake of the 2008 financial crisis.
CLO issuance peaked in 2007, pooling about $105 billion, according to Wells Fargo. Banks arranged $637 billion of U.S. leveraged loans last year, compared with $892 billion in 2007, according to data compiled by Bloomberg.
Credit Suisse, Switzerland’s second-largest bank, was the fourth-biggest underwriter of U.S. leveraged loans last year, according to Bloomberg data. The largest was Bank of America Corp. (BAC:US), based in Charlotte, North Carolina.
CLOs are a type of collateralized debt obligation that pool high-yield loans and slice them into securities of varying risk and returns. Leveraged loans are a form of junk debt rated below Baa3 by Moody’s Investors Service and lower than BBB- at Standard & Poor’s.
Katherine Herring, a New York-based spokeswoman for Credit Suisse, declined to comment.
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