CDC IXIS and Rabobank International have priced the notes backing two middle-market collateralized loan obligations for Cerberus Capital Management. The arbitrage deals contain a diversified portfolio of middle-market loans, said a source, who noted that Cerberus is a well-known originator of the product. The first vehicle is called A3 Funding and is $600 million. The second is a $1 billion CLO called A4 Funding.
Though the deals are both cash-flow arbitrage structures, there are only two tranches above the equity. A banker explained that the CLOs are done primarily from a business perspective to enable Cerberus to lend. Both deals contain large equity components, approximately 30% of the total of each, reflecting the underlying collateral, said the banker. He added that the notes were wrapped by Ambac Financial Group.
CDC is the lead arranger and Rabo is co-arranger, with CDC structuring the deal, according to a banker. A Rabo securitization official referred calls to Ken Wormser, who heads up CDC's securitization team. He declined comment and calls to Cerberus officials were not returned. Since Wormser and his team left CIBC World Markets earlier this year, the firm has been involved in GoldenTree Asset Management's latest CLO as a co-arranger and has the lead spot on an innovative CLO for Patriarch Partners (see story, page 1).