New Underwriter Dusting Off Symphony CLO
Symphony Asset Management has revived a $500 million collateralized loan obligation that it pulled from the market in April, with a new bookrunner.
Now Goldman Sachs is set to lead the deal, rather than Bank of America. Marketing is expected to begin in the coming weeks, with hedge fund manager Magnetar Capital considering buying the issue's equity tranche - as it did for some CLOs issued by Symphony in 2008.
The offering's resurrection comes amid an increasing flow of CLOs, which had fallen off amid the global financial crisis. For example, Apollo Management has retained J.P. Morgan to run the books on an offering that's due out later this year. And Deutsche Bank is marketing a $350 million transaction for Garrison Investment.
Meanwhile, BofA is circulating offering documents for a $300 million CLO from Tetragon Financial affiliate LCM Asset Management. It's even seeking bids on the equity tranches, in a departure from recent trends that have seen issuers or affiliates keep those pieces.
As for Symphony, it's unclear what caused the San Francisco firm to pull its deal and switch bookrunners. Initially, market players cited unfavorable pricing - a factor compounded by nervousness about financial reforms including the then-developing Dodd-Frank Wall Street Reform and Consumer Protection Act.
There also has been speculation that Symphony became uneasy about the legal outlook for collateralized debt obligation managers in general because of an April 16 lawsuit in which the SEC accused Goldman of failing to inform investors that it had allowed hedge fund manager John Paulson to select doomed assets for a swap-backed issue. Goldman agreed to a $550 million settlement on July 15.
Symphony was an active issuer of CLOs until 2008, when - like other players - it stopped producing deals amid deteriorating market conditions. That year, the firm placed four deals totaling $1.2 billion. All told, it oversees $8.5 billion of assets.
CORRECTION (7/30/10): This article has been corrected. The original version gave an incorrect name for Apollo Management.