PIMCO, GoldenTree Market New Deals

  • 23 Mar 2003
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A bearish outlook on arbitrage for collateralized loan obligations is not stopping the rolling tide of managers looking to raise debt, with both Pacific Investment Management Co. (PIMCO) and GoldenTree Asset Management preparing to market new CLOs. Morgan Stanley is leading the GoldenTree Loan Opportunities II deal, while J.P. Morgan is the underwriter for the new PIMCO deal called Waveland INGOTS, with both vehicles approximately $400 million. The shops join a multitude of both established managers and new entrants such as Rabobank International, Sankaty Advisors, Callidus Capital Management and Ares Management in the pipeline. Loan officials at PIMCO declined comment on a potential transaction. GoldenTree's lead loan portfolio manager Fred Haddad was unavailable for comment.

"The arbitrage associated with CLOs is pretty small right now given the run-up in asset prices and the giant spreads it takes to get investors interested in buying the liabilities," said one source. "It is extremely difficult to find investors for the AAA and BB tranches and the equity returns for a normal CLO are quite possibly below 10%," he added. But an analyst said the deals may be taking a little more time to market but they are still getting done. Merrill Lynch Investment Management priced its Longhorn CDO III this month including a first loss AAA tranche that is subordinate to the senior most AAA tranche, in order to ease the problem of placing the higher-rated paper (LMW, 3/17).

PIMCO will be using the proprietary J.P. Morgan INGOTS structure, an upgraded version of the banks Sequils transaction, explained an analyst. INGOTS works by providing the special purpose vehicle with a senior loan agreement that can be drawn upon for defaulted obligations and credit risk securities. If an asset is in default, the CLO can draw down on the loan and reinvest in a security so that the defaulted asset does not have to be sold immediately. The structure of the GoldenTree deal could not be ascertained. The vehicle will be GoldenTree's second CLO.


CLO Pipeline
ManagerDeal Size ($Mln)Name Of FundUnderwriter
PIMCO400WavelandJ.P. Morgan
GoldenTree Asset Management400GoldenTree Loan Opportunities Fund IIMorgan Stanley
Rabobank International300Chiron CDO ICSFB
Sankaty Advisors400Race Point IIDeutsche Bank
TCW550DrawbridgeJ.P. Morgan
Ares Management300-500Ares VIIDeutsche Bank
Callidus Capital Management300Callidus Debt Partners CLO Fund IIWachovia Securities
Deerfield Capital Management300Forest Creek 2003-1Bear Stearns
Nomura Corp. Research and Asset Management300Clydesdale CLOBanc of America Securities
David L. Babson & Company400DLB CLOWachovia Securities
MetLife Insurance300Madison Avenue CDO VSalomon Smtih Barney
Stone Tower Capital300Stone Tower CLOCSFB
Highland Capital400Highland Capital CLOMerrill Lynch
Lightpoint Capital408Lighpoint Capital CLOABN Amro, LINKS
Four Corners Capital Management400MondrianCIBC
Source: Loan Market Week
  • 23 Mar 2003

GlobalCapital European securitization league table

Rank Lead Manager/Arranger Total Volume $m No. of Deals Share % by Volume
1 Bank of America Merrill Lynch (BAML) 7,026 25 11.95
2 Citi 6,449 21 10.96
3 BNP Paribas 5,093 18 8.66
4 Barclays 4,040 11 6.87
5 Lloyds Bank 3,615 14 6.15

Bookrunners of Global Structured Finance

Rank Lead Manager Amount $m No of issues Share %
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1 Citi 120,126.76 346 12.85%
2 Bank of America Merrill Lynch 99,988.41 288 10.70%
3 Wells Fargo Securities 88,516.28 265 9.47%
4 JPMorgan 69,113.88 208 7.39%
5 Credit Suisse 51,313.00 155 5.49%