A number of new entrants seeking to break into Europe’s market for collateralized loan obligations are meeting with investors to pitch their first deals.
(Bloomberg) — A number of new entrants seeking to break into Europe’s market for collateralized loan obligations are meeting with investors to pitch their first deals.
Direct lender Pemberton Asset Management and hedge fund Sona Asset Management are both marketing debut CLOs, according to people familiar with the matter who aren’t authorized to speak publicly.
The deals, comprising European leveraged loans, are expected to launch in the coming weeks, the people said, with JPMorgan Chase & Co. acting as the arranger for both. Sona’s is €350 million ($380 million) in size, according to one of them.
Spokespeople for Pemberton, Sona and JPMorgan declined to comment.
Among the other entrants into Europe’s $300 billion CLO market this year is Arini, the hedge fund of former Credit Suisse star trader Hamza Lemssouguer.
Read more: Lemssouguer’s Hedge Fund Arini Is Marketing Its First CLO Deal
The allure of CLOs, which repackage leveraged loans and sell them on to institutional investors as bonds of varying risk and reward, stems from the stable fees they throw off. Managers can lock in 0.4% to 0.5% of the value of the loan asset, plus bonuses, for six or seven years.
Even so, it’s a challenging moment for the asset class as surging interest rates put the brake on big corporate and buyout deals, and thus demand for the leveraged loans that finance them, while company defaults are starting to pick up.
The debut CLO by Pemberton would come a little over a year and a half after the firm hired market veteran Rob Reynolds to head up its new collateralized loan platform in March 2022.
Meanwhile, John Aylward’s Sona hired Jacob Walton early this year to head up the credit hedge fund’s new platform for collateralized loan obligations in Europe. Walton was previously a director and CLO analyst at Rothschild & Co.
–With assistance from Laura Benitez and Lisa Lee.
(Updates to add previous title for Walton in final paragraph.)
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