Gulf Stream Asset Management, a Charlotte-based asset management shop, is in the market with its debut collateralized loan obligation, the $400 million Compass CLO 2002-1, and is ready to price notes within a week. President Mark Mahoney, who established Institutional Debt Management and was head of the capital markets group at Wachovia Securities and First Union, founded Gulf Stream in March this year. "We started marketing Compass in August, and utilizing a revolver we have been patiently warehousing assets," said Mahoney. The deal is approximately 50% warehoused, he added, noting Barclays Capital is the underwriter. "We have been buying in a very attractive period," he stated.
Mahoney explained that it was the right time in the marketplace to launch Gulf Stream. Barry Love, chief credit officer, and Mark Abrahm, who is responsible for trading strategy, evaluating liquidity and pricing levels, joined Gulf Stream in September from Wachovia. Tim Murdoch joined in the summer as a quantitative expert, also from Wachovia. The intention is to create a next-generation structured finance asset management firm, Mahoney said. "A tremendous amount of lessons have been learned because of the spike in defaults over the last few years," he noted. "[Gulf Stream] is advancing technical observations to allow for more defensive management," Mahoney added.
The firm aims to launch a new deal ranging between $400-500 million every year, with a target of $3.5 billion in total for non investment-grade loan assets, according to Mahoney. Gulf Stream is also prepared to manage stressed and distressed loan products. While at IDM, Mahoney launched seven CLOs totalling $3.5 billion with each deal maintaining compliance and not suffering any downgrade activity while under his direction, according to a Standard & Poor's report on the firm. Mahoney said the debut CLO is a very straightforward, conservative vehicle.