Aladdin Capital Management's second collateralized loan obligation, Landmark II, is pricing this week via Banc of America Securities and Mizuho Bank. The 10-year, $250 million vehicle was downsized from $400 million due to a scarcity of quality assets in the market, according to an official familiar with the CLO. "It has definitely been a turbulent market," he said. Gilles Marchand, senior portfolio manager for Aladdin, declined to comment on the vehicle, which is set to close in mid-September.
Pricing on the $188 million triple-A tranche will be LIBOR plus 48 basis points, a bit outside the levels seen on recent CLOs. The $12 million double-A tranche will be priced at LIBOR plus 90 basis points, while the $24 million triple-B tranche will offer LIBOR plus 265 basis points. The $6 million double-B tranche will be priced at LIBOR plus 750 basis points. The structure also includes a $20 million equity tranche.
The loans, which comprise 95% of the collateral, represent a diverse range of industries, but there is a concentration in broadcasting, gaming, regulated utilities and the food sector, the official said. There also is a 5% bucket for bonds, which is useful as loans pre-pay, he noted, adding that it also helps the arbitrage. Aladdin's debut CLO, called Landmark CLO I, is in compliance with all set tests, and equity returns are above the levels expected, the official said.