Mountain Capital Taps Bear Stearns For Latest CLO

Mountain Capital, The Mizuho Corporate Bank's leveraged loan asset management arm, is in the process of raising its third collateralized loan obligation. Bear Stearns is the lead underwriter and the bank will start ramping up assets soon, noted Atsushi Narikawa, deputy general manager of Americas' financial products division. Mark Hanslin, senior portfolio manager for Mountain, declined comment on the new deal. A Bear Stearns CDO banker did not return calls for comment.

Right now would not seem the best time to be looking for assets as spreads tighten and supply is lackluster. But an official familiar with the situation said Mountain Capital wants to be prepared for a change in the cycle. "The market will move in the other direction. It will be a combination of events, as the demand/supply imbalance turns and [mergers and acquisitions activity] increases," he said. Also, one loan manager explained that the funding costs are low right now, so a CLO can lock in cheap pricing for the life of the vehicle.

According to a recent report from Moody's Investors Service, Mountain Capital II, the second CLO, is in compliance with all its IC and OC tests. The weighted average rating test has a score of 2106 versus a 2500 trigger and is in compliance, as is the weighted average spread test.