StoneCastle closes on first pooled bank CLO since 2008; LCM taps market with third CLO deal

By Cristal Cody

Tupelo, Miss., Oct. 15 – StoneCastle Financial Corp. closed on the first pooled bank credit securitization deal since 2008 on Thursday, while LCM Asset Management LLC tapped the broadly syndicated CLO primary market.

StoneCastle Financial announced that it priced and closed on the $250.5 million Community Funding CLO, Ltd. bank credit collateralized loan securitization.

The CLO sold $205 million of 5.75% class A senior secured fixed-rate notes (A3 expected//) and $45.5 million of preferred shares as collateral with an average 7% yield.

“The original form of pooled bank credit securitizations, TruPS CDOs, were created and first issued by Salomon Smith Barney (now Citigroup) in 1999 by the founders of StoneCastle Partners, LLC, who formerly worked at Citigroup,” StoneCastle said in the release.

“TruPS CDOs accounted for over $40 billion of community bank capital issuance between the years 2000-2008,” the company said.

“The credit crisis of 2008, paired with regulatory changes to bank capital rules, effectively halted issuances of such investment vehicles. This innovative investment solution for bank capital has once again opened the door for community banks to access Tier 2 qualifying capital from the capital markets.”

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