Trimaran Advisors has liquidated its APEX (Trimaran) CDO I with Bear Stearns picking up the $351 million portfolio. "Since we had a significant rate of return we decided to redeem it and return capital to investors," said Jay Bloom, managing partner at Trimaran Capital Partners and a member of the investment committee of Trimaran Advisors. The return on equity was in the mid-20s. The cover bid for the portfolio, which contained 134 issuers, was 100.55.
Additionally, Bloom explained that the reinvestment period on the deal ends in July 2006. The CDO was originated in 2001 and the tests in the structure were out of date. For instance the spread test is LIBOR plus 270 for a double-B credit, whereas double-B credits today are priced at LIBOR plus 2-2 3/4%. "Basically you have a mismatch between the tests and the market." Satisfying those tests was going to be a challenge going forward. Trimaran is still committed to the loan management business, Bloom said, and he attributed the high equity returns to the skill of the management. Bear Stearns officials declined comment.
