Lehman Brothers has priced the notes for Stanfield Capital Partners' $300 million collateralized loan obligation, Carrera CLO. The notes had been in the market for four to six weeks. A banker familiar with the deal said there was solid demand for the paper, explaining the timing for the decision to sell the debt. A portfolio manager added that it's a favorable time to price as the spreads on the pool of underlying collateral are relatively wide. The deal still needs to buy approximately 40% of the collateral, according to the banker. The cash-flow arbitrage vehicle, which comprises 95% leveraged loans and 5% high-yield debt, is the second CLO Stanfield has raised debt for this year (LMW 11/3). Officials at Lehman and Stanfield declined comment.
The $228 million of Triple-As priced at LIBOR plus 58 basis points. The last CLO to price notes was The Blackstone Group's $600 million Hanover Square (12/2). The Triple-A notes for the Blackstone deal priced at LIBOR plus 45 basis points, but those notes are wrapped by Ambac Financial Group, which involves a fee to the manager, said a banker. Before that deal, Barclays Capital Asset Management's Venture CDO II priced the Triple-A notes at LIBOR plus 52 basis points (11/18), and Flagship Capital priced the notes on the Flagship CLO-II, Triple-As at LIBOR plus 50 basis points (10/28).
The A2/A notes are split into two tranches. A $16 million tranche priced at LIBOR plus 175 basis points and a $5 million piece priced off swaps plus 175. "There was interest from a fixed-rate buyer, and the swaps curve represents future LIBOR rates," explained the banker. The Triple-Bs are also split into two tranches. A $12 million piece priced at LIBOR plus 350 basis points and a $6.75 million piece priced at LIBOR plus 300 basis points, but sold at a discount to yield 350 over LIBOR. Equity is $32.25 million. State Street is the trustee according to a banker.