Flagship Capital Management, the loan investment subsidiary of FleetBoston Financial, is in the market with its second collateralized loan obligation, a $400 million vehicle called Flagship CLO-II. Flagship was founded two years ago and is a consistent investor in the leveraged loan market, according to a source, who said the firm's latest effort is about to come to market to rate the liabilities. The source could not comment on what percentage of the collateral has been raised or likely pricing on the liabilities.Ty Anderson, ceo of Flagship and a Fleet veteran, declined to comment on the vehicle. Calls toGoldman Sachs, which is the underwriter for the CLO, were not returned.
"Ramping up the portfolio is becoming easier," said one market source, commenting on the timing of the vehicle. There has been a dearth of assets in the institutional market as demand has outpaced supply, forcing spreads to contract to near the LIBOR plus 2% level earlier this year. Secondary levels were pushed higher, often above par for newly issued deals, but this is now reversing.
Market timing, however, is not driving the Flagship CLO, as the firm continually invests in the market, the source noted. Flagship's previous vehicle, Flagship CLO 2001-1, also was underwritten by Goldman.