Trust Company of the West is in the process of buying a first portion of the collateral for its own TCW Global Project Fund, says Art Carlson, portfolio manager with a Los Angeles division of TCW, the asset manager that created and closed this CDO June 27. Carlson mentions that his firm plans on buying $75 million of the collateral between now and December. The total CDO size is slated to be $500 million.
Carlson adds that, "This type of CDO differs from traditional funds where most of the collateral is in place at closing date." He says that no collateral has been acquired, a result of the fact that this particular structure provides for a three-year ramp-up period after the closing date. During those three years, the collateral manager will slowly acquire the loan portion of the collateral--80% of the deal--which will be self-originated. Those loans are all project-type assets in the energy and infrastructure sectors, according Carlson. Most of those loans will be made within emerging markets.
The loans are senior secured, meaning that they are backed by senior secured positions, according to Sam Fox, a Fitch rating analyst. The bond portion--made of senior debt in emerging markets with a double-B minus rating--will be acquired on the secondary market, specifies Carlson.
Carlson says his firm will launch a second fund of this sort, but not before the deal is fully ramped up, in other words, not within the next three years.