Wachovia Securities and Jefferies & Co. are working on several collateralized loan obligations consisting of loans issued by middle market specialty lenders. CLO players say the market may see more issuance given originators' eagerness to find cheaper sources of funding at the attractive LIBOR levels.
Wachovia is expected to hit the market next month with a deal, according to a ratings agency analyst who says the firm has more planned this year. The analyst notes that Jefferies is talking to two asset managers for similar transactions as CLOs comprised of middle-market loans are expected to account for billions of dollars this year (LMW, 2/11).
The bonds backing the transactions are collateralized by non-rated loans originated by specialty lenders whose capitalization is between $20-75 million.
Wachovia is going to launch a deal with CapitalSource, a Chevy Chase, Md.-based specialty lender next month.Jim Sigman, managing director business loan securitization with Wachovia, was travelling and did not return calls. Jefferies is working with two asset managers but is still at very early stages. One of those managers is Philadelphia-based SunRock Capital.John Hopkins, cfo with SunRock, declined comment as did Michael Ogan, Jefferies' v.p. in charge of structured products. John Delaney, president with CapitalSource, and John Erickson, cfo with American Capital Strategies, did not return calls.