Deutsche Bank placed the winning bid on a $128 million portfolio auctioned off by Babson Capital Management. The cover bid was 101.31 and was placed by Bank of America, said traders. The portfolio was auctioned as a whole and has 85 separate credits. It is mainly “B” loans, but the package also includes some “A” loans, according to one trader. Bids were due Thursday at noon and J.P. Morgan, Morgan Stanley, Wachovia Securities and Bank of America were also said to be possible bidders, traders said. Babson officials and Deutsche Bank traders declined comment. Traders at the rival desks either declined comment or did not return calls.
Babson also priced its latest leveraged loan CDO this week. The $450 million Babson CLO 2004-II is notable for pricing at unheard of levels, according to a J.P. Morgan analyst. The five AAA tranches in the deal priced at LIBOR plus 32 basis points. The AA, A and BBB notes priced at LIBOR plus 57, 105 and 215 basis points, respectively. Morgan Stanley underwrote the notes for the deal, which contains a $35 million revolver to enable the manager to purchase revolving loans. Babson is one of the most experienced CLO managers in the market, with eight CLO transactions containing 95% senior secured loans.