The Carlyle Group is ramping up a new $400 million collateralized debt obligation in a market that has left managers on recent deals challenged by the current dearth of available attractive credits. "We are really pleased with the execution of the deal and now the real challenge is to find assets," said Linda Pace, portfolio manager at Carlyle. The fund's latest deal, Carlyle High Yield Partners IV, is a deal which will comprise 90% leveraged loans and 10% high yield bonds. Pace said the fund is looking to have 45% of the deal's assets ramped up in roughly the next two weeks before the deal's close.
The challenge to find attractive assets coincides with some of the most attractive pricing seen yet on the liability side. "This is the most efficient capital structure we've had and the tightest pricing we've seen this year," said Pace of the deal's triple-A tranche, which was priced at LIBOR plus 44 basis points while average pricing on triple-A tranches so far this year has been LIBOR plus 45-47 basis points. Wachovia Securities is the underwriter.
The deal is structured with a $365.3 million Standard & Poor's triple-A rated tranche, a $11.7 million single-A rated tranche, a $46.5 million triple-B tranche, and a $26 million equity tranche. Pace said the fund averages roughly one CDO a year, but may look to do something else in the second half of this year.