J.P. Morgan won a tight auction when a Stein Roe/Columbia Management Advisors collateralized loan obligation was liquidated last month. According to traders, Citibank put in the cover bid on the approximately $100 million portfolio, which comprised a mixture of par loans, some distressed loans and some illiquid assets, such as small middle-market deals. The winning bid was north of 97, though most bids came within half a point, said a trader.
Credit Suisse First Boston is also said to have taken an interest in the portfolio, which one source described as pretty standard. Traders at the three firms either declined comment or did not return calls.
According to a buysider familiar with the situation, one of the big investors in the CLO wanted it wound down because it was close to the end of the reinvestment period. The exact deal could not be determined, but traders said it was a SERVES portfolio. The vast majority of these portfolios that were originated pre-2000 have been liquidated in the past year as investors have cashed out in a hot market (LMW, 6/18).
The bank loan division of Columbia was bought by Highland Capital Management earlier this year. Columbia had $2.7 billion in bank loan assets under management in CLOs and prime rate funds. The buysider said this particular vehicle had not been transferred to Highland. A Highland official declined comment.
The sale of Columbia was necessitated by Bank of America's acquisition of Fleet Bank. Columbia's mutual funds business, which was affiliated to Fleet, was restricted from buying loans originated by Fleet under the Investment Company Act of 1940. The 40 Act was not a big problem when the mutual funds were unable to buy just Fleet loans, but a combined Fleet/B of A creates a bank loan behemoth that represents too significant a chunk of the leveraged loan market to avoid (4/16).