Franklin Templeton Investments is looking to raise debt for a new collateralized loan obligation after strong reverse inquiry from equity investors in the firm's previous deals encouraged the San Mateo, California money manager to hit the road for the fourth time. Officials at Franklin declined comment on the private placement. One investor said none of the firm's three previous CLO deals have been downgraded, while the equity returns have been north of 20%. Merrill Lynch's CDO group is underwriting the cash-flow deal, named Franklin CLO IV, which is targeted at $300 million. Most of the assets were bought last fall when spreads were high, said the investor, but exact amounts of the portfolio bought could not be determined. Commenting on the task of raising the equity, the investor said it is an issue not being able to travel to Toronto and Hong Kong due to fears over SARS, where some CDO investors are based. "Certainly people won't be holding roadshows in Hong Kong or China," said one buysider. But there is no problem going to Japan or Korea where investors are also located.
Reverse Inquiry Drives Franklin's Fourth CLO