Fraser Sullivan Prices $460 Million CLO - Source

Date : 04/11/2012 @ 6:10PM
Source : Dow Jones News
Stock : Citigroup, Inc. (C)
Quote : 67.98  0.0 (0.00%) @ 4:22AM

Fraser Sullivan Prices $460 Million CLO - Source

Citigroup, Inc. (NYSE:C)
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WCAS Fraser Sullivan Investment Management LLC priced a roughly $460 million collateralized loan obligation Wednesday via Citigroup Inc. (C), according to people close to the matter.

The CLO--a bundle of loans--refinances a $525 million existing CLO arranged in 2010, also through Citigroup. Tranches of the old deal will be paid off with the new money raised, said a person familiar with the deal.

The deal follows CLO issuance topping $6 billion in the first quarter of this year, the busiest start to any year since the financial crisis.

A call to John Fraser, founder of Fraser Sullivan, was not immediately returned.

The deal for Fraser Sullivan priced on the same day as a separate $516.1 million CLO, for Oak Hill Advisors, was marketed by Morgan Stanley (MS). That deal is expected to be priced the week of April 23, according to a term sheet circulated to investors.

Loans are becoming a more popular asset class as investors look to hedge interest-rate risk using floating-rate assets that still provide them better returns than elsewhere in fixed-income. In that sense, investors can get more diversification and more income.

One proxy for loan-market performance, the Markit iBoxx USD Liquid Leveraged Loan Index, has seen returns drop 0.26% since the beginning of April, according to Markit, compared to a loss of 0.84% since the start of the month for high yield or "junk" bonds per the iBoxx USD Liquid High Yield Index.

When markets sold off dramatically earlier this week, the loans index dropped 0.19% through Tuesday night compared to a decline of 0.69% this week for junk bonds.

-By Katy Burne, Dow Jones Newswires; 212-416-3084; katy.burne@dowjones.com

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