New Amsterdam in Talks for Its First European CLO Fund Since ’08Patricia Kuo
New Amsterdam Capital Management LLP, a London-based money manager founded in 2002, is seeking to raise its first European collateralized loan obligation since 2008.
The firm is in talks with banks to raise a 300 million-euro ($391 million) CLO by the end of this year, John Seal, a London-based founding partner of New Amsterdam, said in a telephone interview.
New Amsterdam is among money managers seeking to revive CLO issuance in Europe as the average spread on top-rated portions of the funds tightened to 150 basis points on Feb. 22 from 300 basis points a year ago, according to Wells Fargo & Co. Last month Cairn Capital Ltd. priced a 300.5 million-euro CLO, the first deal in Europe since 2011, according to data compiled by Bloomberg. Pramerica Investment Management Ltd. hired Barclays Plc to raise a 300 million-euro fund.
“We have investors interested in the equity piece of a new CLO and this really only started to happen about four months ago,” Seal said. “It’s a very encouraging sign. The key to success will be sourcing a sufficient amount of assets in a timely fashion.”
The quarterly cash payment to the so-called equity piece, or the riskiest portion, of European CLOs rose to an average of about 3.1 percent last year, the most since 2008, according to Citigroup Inc. 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.
New Amsterdam raised 825 million euros in 2006 for its Mercator I and Mercator II CLOs and 300 million euros for Mercator III in 2007, Bloomberg data show. It sold about 640 million euros of bonds for NAC EuroLoan CLO in 2008.