Goldman Sachs is in the equity marketing phase for a collateralized loan obligation on behalf of The Carlyle Group that will be able to purchase par, stressed and distressed loan assets. "The focus is really on the non-investment grade bank loan market and is designed for them to buy in the 85-95 area," said a source. He said the yet-to-be-named deal is likely to be in the $300 million range.
"GoldenTree Asset Management has a similar type of deal, but there is nothing else quite like this," he added, explaining that CDO managers with the credentials to do this are limited. Investors are said to have reacted well to the asset mix and Carlyle's reputation. Officials at Carlyle and a Goldman banker declined comment.
Initially, Carlyle was looking for a more distressed portfolio, but the run-up in asset prices made that less feasible, he said. The deal is structured as a basic cash-flow deal, but has more latitude in terms of underlying covenant levels. This enables more stressed names to go into the portfolio, a portfolio manager added. Flexibility during the reinvestment period will enable the deal to perform well across credit and business cycles, a third market player said.
Carlyle's high-yield group specializes in structured finance vehicles with an emphasis on leveraged loans and high-yield bonds, and has more than $2 billion of assets under management, noted a Standard & Poor's report on the firm. Michael Zupon is partner, managing director and senior portfolio manager at Carlyle. Linda Pace is a principal and leveraged loan portfolio manager. Mark Alter is a managing director, senior trader and a member of the credit committee.