Citigroup Inc. raised a $1.05 billion collateralized loan obligation to be managed by Guggenheim Partners Investment Management LLC, the largest deal issued this year, according to three people with knowledge of the fund.
The CLO surpasses an $802 million Credit Suisse Asset Management fund raised by Bank of America Corp. in November, according to data compiled by Bloomberg. Citigroup raised a $1 billion deal for Guggenheim last year, the largest of 2011, Bloomberg data show.
The market for CLOs backed by widely syndicated loans totals $50.3 billion in 2012, a more than fourfold increase from last year and the most active since 2007 when a record $91.1 billion of such funds were raised, according to Bloomberg and Morgan Stanley data. Last year $11.7 billion of deals were arranged. Bank of America said $75 billion of CLOs could be created next year.
Scott Helfman, a Citigroup spokesman, and Torie von Alt, a spokeswoman for New York-based Guggenheim, declined to comment.
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. A basis point is 0.01 percentage point.
The Guggenheim deal, Mercer Field CLO, includes a $556.5 million slice rated AAA that pays a rate of 145 basis points more than Libor, said the people, who asked not to be identified because the terms are private. Libor is a rate banks say they can borrow in dollars from each other.
The CLO will invest in senior secured loans, and allows for as much as 40 percent of the deal to comprise senior secured bonds, the people said.