Aladdin Capital Holdings, the Stamford, Conn., and Tokyo-based asset management firm with over $1.95 billion in assets, has thrown its hat into the ring to raise debt for a new collateralized loan obligation. A source confirmed that Bear Stearns would be leading the $300 million deal, called Landmark 3. "The first two [Landmark] deals are doing well," said the source, who added that closing is likely in November. The fund has been warehousing over the last few months and though spreads have contracted, credit quality has improved and the arbitrage is good, the source added. Gilles Marchand, senior portfolio manager at Aladdin, declined comment. A CDO banker at Bear Stearns also declined comment on any deals the firm is leading.
Despite the spreads on loans contracting over the summer, it has been a busy period for issuance and warehousing of CLOs. Goldman Sachs is leading a $300 million deal called Galaxy 2003 for AIG, and though Octagon Credit Investors is said to be weighing its options in a FIN 46 world, Bear Stearns is close to raising the debt for a new CLO (LMW, 9/1). Los Angeles-based Centre Pacific has embarked on a leveraged loan warehouse line with Citigroup (8/24), and Citi is also marketing a $377 million CLO called Foxe Basin for the debt funds group of RBC Capital Partners, led by Daniel Smith (8/3).
Additionally, a number of deals have closed in recent weeks with the top-rated liabilities pricing below LIBOR plus 55 basis points. Last month J.P. Morgan noted global funded issuance in the CDO market this year passed $54 billion, heavily dominated by CLOs which comprise 34% of this total. One analyst pointed to the performance of CLOs versus CBOs as a major factor. As of last June, 50.6% of high yield CBO transactions had seen a downgrade, while out of the arbitrage high yield CLOs it was only 4.9%, according to Standard & Poor's.