Wachovia Securities placed the winning bid today on a $250 million portfolio of loans auctioned off by Sankaty Advisors, the fixed-income subsidiary of Bain Capital. The auction took place Tuesday morning and eight dealers bid in a close range above par, said a source. A trader said the cover bid was just over par. Jonathan Lavine, managing director and chief investment officer of Sankaty, and Eric Lloyd, head of loan syndications at Wachovia, did not return calls. This particular fund was reaching the end of its investment period and Sankaty realized that they would get more by selling it as a whole rather than piecemeal, a source noted. He added that the auction was “hugely successful for Sankaty.” A trader said the equity investors in the CLO wanted to cash out, but the name of the fund could not be determined. Sankaty has over $3.3 billion in bank loan investments and over 10 loan deals. Great Point II CLO is one of Sankaty’s deals that reached the end of its reinvestment period last June.
Another trader said the portfolio, which contains about 150 mostly par names, had to be completely bid for. He added that the winning bank would then look to sell it off in smaller chunks. Portfolio auctions have shot up in frequency this year. CLOs hitting the end of reinvestment periods and the demise of certain vehicles, such as the Sequils Mincs transactions, have led to numerous portfolio sales. Meanwhile, massive demand from investors having to ramp up quickly has created a captive buying audience for portfolio trades.