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AMEX Scores Mammoth CLO In Hungry Market

15 Apr 2004

American Express Asset Management last week priced one of the largest cash-flow collateralized loan obligations in several years after market hunger drove the size of the deal far beyond its original bogey.

American Express Asset Management last week priced one of the largest cash-flow collateralized loan obligations in several years after market hunger drove the size of the deal far beyond its original bogey. The $1.1 billion Centurion VII deal was said to be initially slated at a much lower size, but the manager rode a wave of demand. "AMEX initially modeled a smaller size, but given investor demand we upsized and even at this larger level we were oversubscribed," said an AMEX spokesman. He said the structure was a typical CLO structure with UBS as the underwriter.

Sources said AMEX was initially planning a $400 million CLO and increased it earlier this year. The spokesman was unable to confirm these details. Price talk on the top-rated tranches of the notes was LIBOR plus 40 basis points. Jeff Herlyn, a co-head of the global credit CDO group at UBS, declined comment.

Earlier this year, The Blackstone Group raised a $1 billion CLO called Monument Park CDO with UBS as the lead. This transaction was structured like a delayed-draw loan with an 18-month drawdown. It could not be determined what the ramp-up period is for the Centurion transaction or how much of the assets have been bought already. Amex's CDO group prior to this transaction had assets of approximately $7.5 billion at par value in both traditional cash flow and synthetic structures in high-yield loans and bonds, according to Standard & Poor's. Lynne Hopton and Yvonne Stevens lead the CDO team.

15 Apr 2004