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SecuritizationCLOs-CDOs

Sycamore Tree closes first CLO and plans to become a 'consistent' issuer

Single sycamore tree on grassy hillside near Whitwell, Isle of Wight. JMH5146

Floating rate notes and fixed rate tranches included in debut deal

Debut CLO manager Sycamore Tree Capital Partners has closed its first issuance and has appointed Scott Farrell and Paul Travers to co-manage the transaction.

STCP CLO 1 is a $403.3m CLO that includes five classes of floating rate notes and two fixed rate tranches, a common choice among managers to attract a more diversified pool of investors.

The deal's 'A' notes, rated AAA by S&P, were priced at 125bp over three month Libor. The class 'B' notes, rated AA, were sold in two tranches. The floating rate tranche was priced at 180bp over three month Libor and the fixed rate tranche at 3.28%.

The single-A floating rate tranche was sold at 225bp and the single-A fixed rate tranche at 3.68%.

The deal has the common five year reinvestment period. It was arranged by Citi.

The firm has disclosed that the first deal will be co-managed by Scott Farrell and Paul Travers, both industry veterans and managing directors at Sycamore.

The CLO is the first transaction priced by Sycamore Tree Capital, a newly formed private and alternative asset manager headquartered in Dallas. It was founded by former Highland Capital Management partners Mark Okada, Jack Yang and Trey Parker.

Despite being new in the market, the firm has pedigree in being led by executives with deep roots in the credit market and many CLOs under their belt.

The firm plans to become a "consistent issuer," said CEO Mark Okada.

"In our view, the positive outlook for corporate credit and interest rate volatility make this a particularly attractive time to issue CLOs," Okada added.

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