Commercial Industrial Finance Corp.has closed its first collateralized loan obligation. The fledgling co-lending partner, which opened its doors in December, will rely on securitizing loans it takes onto its books as its primary source of financing, said Peter Gleysteen, ceo in New York. Co-lenders form lending partnerships with banks to invest in pieces of loans.
The $536 million CIFC Funding 2006-I is a cash flow CLO backed by 40% middle market loans and 60% broadly syndicated loans. CIFC retained 15% of the CLO's equity as part of its investment strategy, Gleysteen said. Keeping part of the equity also signals to investors a close alignment of interests, he noted.
The deal was priced at the tight end of the market, with the triple-A tranche coming in at LIBOR plus 26 basis points. Gleysteen attributed the spread, tight for a first-time issuer, to the fact it was 100% ramped at close. Bear Stearnsis the underwriter. The deal closed Aug. 3.
CIFC will add another 10-20 professionals to its existing group of 35 in loan underwriting, portfolio management and credit analysis before the end of the year in response to growth in the business, Gleysteen said. He declined comment on future deals in the works.