Arranger ends drought with first arbitrage CLO of 2009

By David M Graubard

The first visible new issue US arbitrage cashflow CLO of 2009 priced this week according to well placed market sources

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Comment by: Anonymous. Posted 15 years ago [2009-01-20 15:26:30]

This seems to be a warehouse clearance with the minor exception that there is a 6 month revolving period. Given expectations for repayments and new issuance in that period, it is basically a static deal.

Comment by: Anonymous. Posted 15 years ago [2009-01-16 16:36:55]

I am suprised that the curve is so steep (0ver 300-350 bps for 3 to 7 years) for AAA's. I would be very curious to know what the effective print was...

Comment by: Anonymous. Posted 15 years ago [2009-01-16 15:13:18]

Given how low leveraged loan prices are, this type of deal makes sense. For the AAA buyer, this is an opportunity to puchase a clean portfolio with a short WAL. Equity returns could have tremendous upside if loan prices rally and the deal is called, even with a make-whole payout to AAA. Not enough AAA buyers around however so issuance will remain small.

Comment by: Anonymous. Posted 15 years ago [2009-01-16 14:22:13]

Are we really talking about an "Arbitrage" trade and not a balance sheet exercise for a third party commercial bank?