Citigroup Said to Raise $437 Million CLO for Apollo Global

Citigroup Inc. raised a $436.7 million collateralized loan obligation for Leon Black’s Apollo Global Management LLC, according to four people with knowledge of the deal.

A $273 million slice of the ALM V fund rated AAA by Standard & Poor’s pays an interest rate at 150 basis points more than the London interbank offered rate, said the people, who declined to be identified because the terms are private.

Three CLOs backed by widely syndicated loans for $1.2 billion have been raised in the U.S. this year, according to data compiled by Bloomberg. There were $11.7 billion of such CLOs raised last year. At the height of the market in 2007 there were $91.1 billion issued in the U.S., according to Morgan Stanley data.

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.

Charles Zehren, a spokesman for New York-based Apollo, declined to comment. Scott Helfman, a Citigroup spokesman, didn’t immediately return a telephone call seeking comment.

The CLO was increased from an initial target size of $400 million, according to Bloomberg data.

The interest rate on the fund came in at the low end of the guidance of 150 basis points to 155 basis points more than Libor, the rate at which banks say they can borrow in dollars from each other, said the people.

Details of the CLO structure are as follows:

Tranche          Size              Rating     Coupon
Class A-1        $273   Million    Aaa/AAA    L+150
Class A-2        $37.2  Million    Aa2        L+200
Class B          $37.7  Million    A2         L+300
Class C          $14.9  Million    Baa2       L+450
Class D          $25.7  Million    Ba2
Sub Notes        $48.15 Million    Not Rated
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