TCW Advisors>/em> is raising for a specific investor pool a $400 million collateralized loan obligation that has fewer tranches and a larger equity component than typical CLOs. The deal has a $300 million AAA tranche, $30 million A tranche and a $20 million BBB tranche. There is a $50 million equity slug. A TCW official declined comment.
A portfolio manager explained that FIRST 2004-II CLO is a bespoke transaction on behalf of a specific group of investors that are looking for a modestly leveraged stable return-type profile. "As a result it was not necessary to tranche the liability structure that you would normally find in a traditional CLO-type transaction," he added. The pool will be leveraged loans and synthetics referencing leveraged loans. The bank debt portfolio management team at TCW is headed by Managing Director Mark Gold. J.P. Morgan is underwriting and marketing the deal, which will be TCW's ninth CLO.
Ares Management is also in the process of raising a $650 million CLO called Ares Enhanced Loan Investment Strategy that is for a single investor. This has a 20% equity component and is designed to have a less volatile risk-return profile (LMW, 10/29).