INVESCO Sets New Benchmark For Avalon Redux
Lehman Brothers has wrapped up a refinancing of a collateralized loan obligation for INVESCO Senior Secured Management that scored the tightest pricing seen on the top-rated tranche of a leveraged loan CDO.
Lehman Brothers has wrapped up a refinancing of a collateralized loan obligation for INVESCO Senior Secured Management that scored the tightest pricing seen on the top-rated tranche of a leveraged loan CDO. "We are very happy with the transaction and how it ultimately ended up," said Anthony Clemente, head of the bank loan/cdo group at INVESCO. "We were extremely delighted at the level of execution the market provided us."
The triple-A notes printed at LIBOR plus 27 basis points. The $602 million deal is called Avalon Capital 3 and a large part of its collateral is from Avalon Capital 2, a 2001 vehicle. A source said the decision to refinance came because there was "enough interest in the environment to do it and an interested investor base." The success of the first fund, that source said, allowed the transaction to take place. A Lehman banker declined comment. The deal was anticipated to close Feb. 24.
Just as credit spreads have tightened on leveraged loans, there has been a corresponding compression in CLO liabilities. This is partly driven by triple-A buyers executing negative basis trades and a surge in popularity in CLO paper. Highland Capital Management achieved a tighter spread for its latest $685 million Southfork CLO with the top-rated tranche pricing at LIBOR plus 25 basis points, but this included a wrap from a financial insurer (LMW, 2/21).
|How It's Priced|
|AAA/Aaa||$400 million||8.5||LIBOR plus 27|
|AAA/Aaa||$50 million||8.5||LIBOR plus 28|
|AA/Aa2||$20.2 million||10||LIBOR plus 45|
|A/A2||$39 million||10||LIBOR plus 80|
|BBB/Baa2||$40.8 million||10||LIBOR plus 195|