Centre Pacific, a Los Angeles-based asset management shop led by John Casparian andHeather Creeden, is in the market with a $409 million collateralized loan obligation called Cascade CLO, the firm's second CLO. UBS Warburg is the underwriter for the cash-flow arbitrage deal, which will consist of high-yield loans and some bonds, according to a banker. It could not be ascertained how much of the underlying collateral has already been purchased. Centre Pacific's debut vehicle, Sierra CLO 1, contained 90% loans and just under 10% bonds.
The new CLO comes to market nearly two years after Centre Pacific came out with Sierra, although the firm did attempt another vehicle called Shasta CLO 2002-1 this past February. That effort was aborted for reasons that could not be determined. Casparian declined to comment on both the new vehicle and Shasta.
Centre Pacific's founding team, which also includes Kevin Hickam, is from Transamerica Investment Services, where they managed about $5 billion in high-yield assets. Fostered by their insurance background, the management aims to take a conservative approach in investment decisions and intends to hold credits until their natural closure, according to a Standard & Poor's report on the firm.
All of the high-yield assets managed by the group experienced minimal defaults prior to their departure from Transamerica in January 2000, the report states. Aiming to maintain diversification, portfolios generally consist of 100 credits with a maximum position of 2% of collateral assets. Industries tend to be less than 8% of par assets, but the team will allow exposure to exceed 8% if relative value can be found in the credit.