Bear Stearns Prices Denali's Latest Offering

Bear Stearns has priced the notes for Denali Capital's third collateralized loan obligation, the $425 million Denali Capital CLO III, which will target middle-market loans, a rarely tapped area in the CLO universe. Though the vehicle will primarily tap the broadly syndicated loan market--deals over $250 million--Denali will aim for a meaningful level of middle-market loans as they offer better spreads, higher initial fees and better credit packages (LMW, 5/4). Greg Cooper, managing director and partner, declined to comment. Calls to a Bear Stearns banker were not returned by press time.

According to a Standard & Poor's report on the firm, Denali seeks investments in three loan sizes: the traditional middle-market as defined by $50-125 million deals; larger middle-market, which is $125-250 million; and broadly syndicated loans, which are those over $250 million. Broadly syndicated loans currently comprise about two-thirds of Denali's CLOs since it is generally easier to access these investments. But the aim is for at least 25% of the new CLO to be comprised of middle-market loans, the report states.

Denali already manages two CLOs, with DC Funding Partners as the issuing vehicle. DC is partially owned by a silent investor, Mountain Line, which is an Edward Bass organization. David Killion is the ceo of Denali, while managing directors and partners Cooper and Robert Coseo source, screen and trade for Denali. John Thacker is the chief credit officer.