According to a source, one of the big investors in the CLO wanted it wound down because it was close to the end of the reinvestment period. The exact deal could not be determined, but traders said it was a Serves portfolio. The vast majority of these portfolios that were originated pre-2000 have been liquidated in the last six months as investors have cashed out in a hot market (LMW, 6/18).
The bank loan division of Columbia was bought by Highland Capital Management earlier this year. Columbia had $2.7 billion in bank loan assets under management in CLOs and prime rate funds. A source said this particular vehicle had not yet been transferred to Highland.
The sale of Columbia was necessitated by Bank of America's acquisition of Fleet Bank. Columbia's mutual funds business, which was affiliated to Fleet, was restricted from buying loans originated by Fleet under the Investment Company Act of 1940. The 40 Act was not a big problem when the mutual funds were unable to buy just Fleet loans, but a combined Fleet/B of A creates a bank loan behemoth that represents too significant a chunk of the leveraged loan market to avoid (4/16).