Tiptree Financial prepares to bring new CLO; Apollo settles refinancing of ALM V CLO

By Cristal Cody

Tupelo, Miss., Aug. 13 – Tiptree Financial Inc. is underway with plans to bring a new CLO deal, according to the company on Thursday.

The company said in its second-quarter earnings release that it sold $39.7 million of subordinated notes in two CLOs and contributed the majority to Telos 2015-7, Ltd.

“A portion of the proceeds, $30 million, was invested into a new loan warehouse facility in the third quarter 2015 in anticipation of the creation of a new CLO (Telos 7),” the company said in the release.

Tiptree said in the quarter and six months ended June 30 it sold subordinated notes in the Telos CLO 2007-2, Ltd. and Telos CLO 2013-4, Ltd. vehicles, partly to fund the diversification of principal investments and “secondarily to recycle capital from existing, amortizing CLOs into a new loan warehouse facility with the objective of creating new CLOs to increase asset management fees.”

The company’s pre-tax net income from its CLO business in the quarter was $1.9 million compared with $7.1 million of income in the same period a year ago.

“The primary drivers of the decline in 2015 were attributable to realized and unrealized losses incurred on the company’s holdings of CLO subordinated notes in the second quarter of 2015,” Tiptree said in the release.

CLO manager Telos Asset Management LLC, a subsidiary of New York-based Tiptree, was previously in the primary market in 2014 with two CLO deals.

Apollo wraps refinancing

In other market activity, Apollo Credit Management (CLO) LLC refinanced $437.5 million of notes due Oct. 18, 2027 in the previously reported vintage 2012 ALM V, Ltd./ALM V LLC deal.

The $301.5 million tranche of class A-1-R2 senior secured floating-rate notes (Aaa/AAA) was refinanced at Libor plus 142 basis points.

Mitsubishi UFJ Securities (USA) Inc. was the refinancing agent.

Proceeds were used to refinance the original classes of notes on Thursday.

The transaction is backed primarily by broadly syndicated senior secured corporate loans.

Apollo Credit Management, the New York City-based subsidiary of Apollo Global Management, LLC, has priced two new CLOs and refinanced two vintage CLOs year to date.

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