Lehman Brothers was able to score cheap pricing for collateralized loan obligations for American Money Management Corp. and Canyon Capital Advisors in the last two weeks. A source said the triple-A liabilities on the $375 million American Money Management vehicle priced at LIBOR plus 37 basis points. The top-rated tranche on the $400 million Canyon deal is said to have priced at LIBOR plus 38 basis points. Officials at American Money Management declined comment. A Lehman CDO banker and Canyon portfolio managers did not return calls by press time.
Bear Stearns Asset Management, Credit Suisse Asset Management and The Carlyle Group have all obtained similar cheap financing through issuing structured vehicles in the last few weeks. Pricing has plummeted from over LIBOR plus 50 basis points on the top-rated tranche of a CLO at the start of the year to the sub 40 levels (LMW, 4/26).
The $375 million American Money Management CLO is called AMMC CLO III. There will be a 10% basket for senior unsecured loans, second-lien loans and senior secured floating rate notes. The Canyon Capital deal is the firm's first CLO, but the Los Angeles-based firm has over $5.3 in billion debt and equity securities under management, including two high-yield CDOs. The deal is considered slightly unusual in that it will target B1/B2 loans, whereas most CLOs target a slightly higher credit range. In order to accommodate the strategy, there is more equity in the deal--about 10% rather than the 6-8% equity that is more typical (LMW, 5/28). There is a 15% bucket for second-lien loans.