The First-ever Collateralized Loan Obligation-Applicable Margin Reset (CLO-AMR): Providing services and pioneering solutions that adapt to the new market
In July, BNY Mellon was appointed to administer the first-ever Collateralized Loan Obligation-Applicable Margin Reset (CLO-AMR) issuance. The ability to incorporate the AMR feature allows CLO managers to reprice CLOs more simply and easily. This is through an auction mechanism which bypasses the need for a traditional refinancing via new issue underwriting. This CLO-AMR feature is among the industry’s newest risk retention structures that have emerged in the market and relies on the Sancus Capital SEC no action letter received in September 2016. The AMR mechanism avoids new issuance of securities and eliminates the need for an updated risk retention fair-value analysis typically required at the time of a traditional refinancing.
BNY Mellon is the first and only CLO custodian service provider to implement this comprehensive, efficient and cost-effective solution. The deal parties, Crescent Capital (Collateral Manager), Sancus Capital (Equity Investor) and MUFG (Arranger), approached competitors and BNY Mellon alike to work on developing this innovative solution. However, only BNY Mellon delivered, showcasing our scope of expertise and breadth as an organization.
BNY Mellon’s capability to deliver this solution efficiently was a key factor in successfully bringing this deal to market. With BNY Mellon tapping into its global suite of services through its Corporate Trust division and broker-dealer affiliate, BNY Mellon Capital Markets, LLC, acting as Trustee and AMR Agent respectively, it resulted in this first-of-its-kind CLO-AMR structure.
Highlighting this major win, sales and relationship managers Suzana Bilali and Bobby Weil share, this demonstrates BNY Mellon’s commitment to finding holistic solutions for our clients, and how we are helping our clients and their clients win. Bobby Weil states, “We are very proud to be the first CLO Trustee/AMR Agent to market with this structure and look forward to being appointed on many more.”
The deal was achieved by leveraging the collective experience of team members including Suzana Bilali, Bobby Weil and Irina Palchuk, and through cross-collaboration across various service offerings in BNY Mellon, such as Structured Products and Auction Rate Securities.
BNY Mellon is pleased to announce that we have been engaged to deliver the same solution for collateral managers in pending CLO-AMR transactions. We look forward to more opportunities in this sector and delivering continued high-quality service for our clients.
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