Levitt's Stone Tower Shop Scores Pricing Success

The notes for Stone Tower Capital's $325 million debut collateralized loan obligation, which contains a substantial number of Credit Suisse First Boston-led loans, have priced. A banker said Stone Tower is augmenting the deal with some additional buying of secondary loans, but amounts could not be determined. Stone Tower bought a pool of loans, both pro rata and institutional, from CSFB for the vehicle, which one buyer of CLO paper called, "very compelling, very different and very interesting" (LMW, 6/1).

Aside from the manager buying the loans primarily from CSFB, the deal is unusual in that the portfolio is already seasoned. Most CLOs buy paper in the primary. As a result, the notes and loans have a very short tenor. The $262.75 million Aaa/AAA tranche has a Weighted Average Life (WAL) of just 2.1 years. The top-rated tranche priced at LIBOR plus 48 basis points, which is significantly less expensive than other CLOs this year. The equity piece is $14.63 million. Mike Levitt, chairman of Stone Tower and previously a partner at Hicks, Muse, Tate & Furst, formed the asset management shop last year after 20 years involved in leveraged buyouts (1/12). Levitt did not return calls.