Highland Capital Management has teamed up with CDC IXIS Capital Markets on a $700 million collateralized loan obligation called Jasper CLO that enables the manager to extend the life of the deal. The move is timely as a number of managers are currently having to refinance CDOs. Jasper has the possibility of extending the 12-year maturity embedded within the documents.
"It's more attractive for the equity and the manager to conceivably have a more permanent style for the portfolio," said a CDO banker. He added that it also simplifies the process and is less costly for the manager than refinancing or creating a new deal. Officials at Highland and CDC declined comment on the transaction.
Though unusual, this is not the first time a manager has put this provision in place. Highland also used the language in its Southfork CLO arranged by JPMorgan, noted Standard & Poor's analyst Lily Cheung. The banker said he expects this feature to become more common, noting that there is a fairly sizeable group of managers that can complete a deal at any time and there is a move to reduce the costs of raising a CDO as the product becomes more standardized.
The Jasper CLO also reunites Ken Wormser's CDC team with Highland. While at CIBC World Markets, the group led four CDOs for Highland. Since bringing over the 25-strong team from CIBC in 2003 the group has primarily led CLOs for distressed lenders such as SilverPoint Capital, Cerberus Capital Management and Patriarch Partners. The triple-A notes on the deal priced at LIBOR plus 27 basis points.
