Crescent Capital’s latest collateralised loan
obligation (CLO) includes an embedded automatic refinancing
feature, which is expected to make such future transactions
cheaper and faster.
The deal could prove a significant development in the
context of heightened risk retention requirements in the
asset-backed securities (ABS) market. According to a person
close to the deal, the AMR structure provides a cheaper, more
efficient mechanism by which the deal parties can reset margin
rates on different tranches of the CLO in an effort to avoid
the costly and time-consuming refinancing process.
The $413.7 million Atlas Fund, which closed at the end of
July, comes with a built-in automatic margin reset (AMR)
feature. It’s based on a mechanism which means
that each class of debt is subject to auction after the
mandatory two-year non-call period.
While the CLO fund itself is standard, with four or five
tranches of debt and...