StormHarbour Securities LP arranged its first collateralized loan obligation, a $515 million fund for Feingold O’Keeffe Capital LLC.
The deal includes a $325 million slice rated AAA that has a coupon of 145 basis points more than the London interbank offered rate, according to a person with knowledge of the fund, who declined to be identified because the terms are private. The CLO is Feingold O’Keeffe’s first since the credit crisis, the person said.
The fund also is the first CLO to price this year after $52.2 billion of deals backed by widely syndicated loans were arranged in 2012, according to data compiled by Bloomberg. Bank of America Corp. expects $75 billion of deals may be created this year, while JPMorgan Chase & Co. forecasts as much as $70 billion and Morgan Stanley expects $60 billion of the funds, which help finance mergers and acquisitions.
“We expect a robust pipeline for the first few months of the year,” Richard Hill and Kenneth Kroszner, CLO desk strategists at Royal Bank of Scotland Group Plc, wrote in a report yesterday about CLO issuance. “Investors now have 2013 allocations to put to work and issuers/arrangers have geared up new deals to meet this demand.”
The Feingold CLO, which was increased from $400 million because of demand, is backed by widely syndicated loans, the person said.
“We are very pleased to have completed this upsized transaction with StormHarbour,” said Scott D’Orsi, investment principal at Boston-based Feingold O’Keeffe, which oversees about $1.8 billion. This is Feingold’s fourth CLO and first since 2007.
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. Libor is a rate at which banks say they can borrow in dollars from each other.
StormHarbour, founded in 2009 by Antonio Cacorino and Fredrick Chapey, is a global markets and financial advisory firm. It has been trading CLO pieces since the firm began, though the Feingold deal is the first it has arranged.
Edward Berry, a spokesman for StormHarbour at FTI Consulting, declined to comment.