Citigroup Inc. is raising a $395 million collateralized loan obligation to be managed by Apidos Capital Management LLC, according to two people with knowledge of the deal.
The Apidos CLO VIII is expected to include a $264.4 million piece rated AAA by Standard & Poor’s, said the people, who declined to be identified because the terms are private.
There have been more than $7 billion of CLOs backed by widely syndicated loans raised in the U.S. this year, up from more than $3.4 billion last year, according to Bloomberg data. At the peak of the market in 2007 there was $91.1 billion of the debt issued, according to Morgan Stanley. JPMorgan Chase & Co. said in an Aug. 12 report it maintains its estimate of $10 billion to $15 billion of CLO issuance this year.
The Apidos fund may also include a $40 million AA piece, a $27.8 million A slice, a $16 million BBB piece and a $15 million BB slice, the people said. There is also $31.7 million of subordinated notes.
CLOs are a type of collateralized debt obligation that pool high-yield, high-risk loans and slice them into securities of varying risk and return.
The price of the underlying loans has been falling, hitting the lowest level the year of 87.47 cents on the dollar Aug. 26, according to the S&P/LSTA U.S. Leveraged Loan 100 Index.
Purvi Kamdar, director of marketing and investor relations at Resource America Inc., referred a call to Christopher Allen, chief operating officer of New York-based Apidos, who couldn’t be reached for comment. Apidos is a unit of Resource.