Golub Capital Partners Prepared $ 651.5 Million CLO on Middle Market Debt
Golub Capital Partners CLO 54, is in the process of issuing $ 651.5 million in loan bonds backed by middle market senior secured loans, composed almost entirely of senior secured loans.
Wells Fargo Securities is bringing the deal to market, with GC Investment Management acting as collateral manager, and the three largest industries represented in the portfolio account for up to 52% of the portfolio balance. In addition, the top 10 debtors can represent up to 29% of the overall portfolio balance. Wells Fargo Bank as a trustee, according to Fitch Ratings.
Like other CLOs, Golub 54 has a four-year reinvestment period, with a two-year non-callable period. GC Investment Management is authorized to use the principal proceeds to exchange a credit risk bond for any other credit risk bond and related equity securities. However, certain conditions must be met, such as the oversizing test being satisfied.
In addition, this exchange may not exceed 10% of the highest initial nominal amount since the closing date. Fitch, however, says this item could lead to par erosion as equity securities on the exchange do not meet the definition of a collateral obligation and would be carried to a zero capital balance.
Maximum unique debtors represent 3% of the Golub 54 pool, and maximum unique debtors represent 20%. In addition, the upper limits for second privileges are set at 5% of the pool; cov-lite funding will not represent more than 12.5%; and financing to debtors outside the United States will only be up to 20%.
With respect to Fitch’s expected ratings on the four-tier capital structure, Class A of $ 354.2 million is expected to receive an “AAA” rating; the $ 61.7 million Class B Notes should be rated “AA” and the $ 45 million Class C Notes should be rated “A”. Subordinate Class D, at $ 45 million, is expected to receive a “BBB” rating.