02/19/2010

Stanfield Seeks Offers for CLO Assignments

Stanfield Capital is thinking about unloading the management assignments for 12 collateralized loan obligations.

The firm has so far spoken to a few possible buyers in hopes of gauging interest in such an offering. If it moves forward, the effort would mark one of the largest in a string of similar sales that have taken place in the aftermath of the credit-market collapse. It would also eliminate a large chunk of Stanfield's business.

Stanfield, which focuses on leveraged-loan investments, runs 17 collateralized debt obligations overall. The contracts it is currently pitching encompass 11 all-cash issues and one synthetic transaction backed by leveraged loans. The other six, underpinned by loans and perhaps other assets, could go up for grabs as well.

CLOs had come to be an increasingly important part of Stanfield's business over the years. The New York firm, founded in 1998 by Stephen Alfieri and Christopher Jansen, used to have a hedge fund operation. But Chris Pucillo spun off that business in 2007 to form Solus Alternative Asset Management.

Now Stanfield runs some $5 billion through various loan vehicles, of which $4.6 billion is in its CLOs. Separate accounts make up part of the remainder.

Stanfield's move to pare back its CLO-management business comes amid a stream of similar offerings that has been growing in recent months, in part because many sellers no longer find the business appealing. For Stanfield's part, the firm apparently wishes to capitalize on a bounce-back in the values of CLOs from their credit-crisis lows. The thought is that the improvements could carry over to the values of deal assignments by boosting the fees that go with them. For instance, equity stakes in CDOs that were trading at 20-25 cents on the dollar at yearend had climbed to almost 40 cents by the end of January, according to a Feb. 9 research report from Citigroup.

Elsewhere, Allied Capital sold its Callidus Capital platform, encompassing eight CLOs, to Blackstone Group in December. In January, ING Alternative Asset Management took over three of Avenue Capital's loan-backed vehicles. Mizuho and DiMaio Ahmad Capital are also among shops that are open to bids for their CLO-management assignments (see article on Page 3).

Blackstone has been the most active buyer, following up on its early-2008 purchase of GSO Capital. GSO controlled 21 CLOs, according to S&P. Babson Capital has been active as well, assuming management of five deals from Jefferies & Co. late last year and picking up an assignment from WestLB subsidiary Brightwater Capital in 2008. Still, less than 5% of CLOs have experienced a change in management during the credit crisis, according to Citi.

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