This first CLO 2.0 managed by Natixis Investment Managers’ affiliate Natixis Asset Management was structured and marketed by Natixis’ Corporate & Investment Banking arm and complies with CRD IV risk-retention rules. The deal met with strong investor demand.
Buoyant market relying on robust expertise
Professional investors are seeking solutions that combine yield and credit risk management, and are revisiting these investment vehicles. CRD IV regulation, which came into effect in July 2013, has limited availability of CLOs on the market as a result of rules on the alignment of interests, entailing hefty capital requirements and thereby creating a real challenge for investment managers.
Natixis’ experts at both Corporate & Investment Banking and Natixis Asset Management worked closely together to address these challenges. Natixis Asset Management benefits from more than 15 years’ expertise in corporate debt securitization and is well renowned on this asset class. Teams at Corporate & Investment Banking who managed the structuring and placement of the bonds issued by the CLO have 13 years’ experience on this market.
Diversified portfolio and high-quality management
The Purple Finance CLO 1 portfolio is diversified across various business sectors and geographies and consists of around one hundred corporate debt obligations.
At least 95% of the portfolio will be made up of first lien senior loans at any given time, while a maximum of 5% of the portfolio can be invested in subordinated loans and/or in bonds.
Purple Finance CLO 1 is managed by Natixis Asset Management’s corporate private debt team, which is in charge of a range of individual mandates, funds and CLOs with total assets of close to one billion euros (as at November 30, 2017). Deputy Chief Executive Officer of Natixis Asset Management, in charge of Fixed Income and Equities
Ibrahima Kobar notes: "Natixis Asset Management has been managing structured debt to serve its clients for more than 15 years. We have the necessary set-up required to meet the range of regulatory requirements involved in CLO 2.0 and a group of highly skilled specialists well equipped to structure, assess risk and select the appropriate loans. We aim to launch one CLO each year, market conditions permitting, and are also carefully considering the US market with a view to pursuing our international expansion."
Emmanuel Issanchou, Head of Global Structured Credit & Solutions at Natixis’ Corporate & Investment Banking arm, notes: “Most of the Purple Finance CLO 1 tranches were oversubscribed. The CLO securitization format enables sophisticated investors to carefully steer their risk/return balance as a result of the various tranches on offer and benefit from a diversified risk profile, while also enjoying a yield premium as compared to the underlying loans. Natixis is extremely active on this market, with 18 deals arranged in 2017.”
