BlueMountain Capital Management Closes $361 Million Collateralized Loan Obligation

Firm's Total CLO Assets Under Management Now at $1.7 Billion

Aug 16, 2011, 08:30 ET from BlueMountain Capital Management


NEW YORK, Aug. 16, 2011  /PRNewswire/ -- BlueMountain Capital Management (BMCM), a private investment firm specializing in the global credit markets, today announced the closing of a new $361 million collateralized loan obligation (CLO). The new vehicle, BlueMountain CLO 2011-1, Ltd, is the fourth that BMCM has brought to market, and its first new CLO issuance since 2007. BMCM now manages $1.7 billion in CLO assets, and a total of approximately $6.7 billion across multiple credit strategies. 

BMCM's three other CLO's, issued in 2006 and 2007, have been among the top performing of their vintages. BMCM's first three CLOs paid last quarter annualized equity distributions of 28 points, 40 points, and 34 points, respectively. Overall CLO issuance this year, while up from 2010, remains a small fraction of the levels of 2004 through 2007 and only managers with very strong track records and performance have successfully brought new deals this year.

"CLOs are an attractive and diversified means for investors to gain exposure to the corporate loan market which we believe offers good value, especially compared to unsecured high yield bonds," said Stephen Siderow, President and Co-founder of BlueMountain. "The strong performance of our first three CLOs, the depth of our research team and breadth of BlueMountain's other investment activities across the credit markets in North America and Europe, gave us the confidence to come to market."

Charles Kobayashi, who heads BMCM's CLO Investment Management team, is managing the CLO. He has 13 years of experience in CLO management and has served as portfolio manager on eight CLO and collateralized bond obligation (CBO) transactions. Peter Greatrex, BMCM's Head of Research, and the firm's trans-Atlantic research team of 18 multiple industry sector analysts, support Mr. Kobayashi. Bank of America was selected to arrange the transaction.

"Underscoring our confidence in Charles Kobayashi, the team and this issuance, we have invested significant capital in the CLO alongside our third-party investors," said Mr. Siderow.

BMCM has invested in a majority of the CLO's equity tranche along with a range of U.S. and non-U.S. institutional investors.

BlueMountain CLO 2011-1, Ltd. has a maturity date of Nov. 15, 2022 and consists of:

  • $228 million AAA tranche priced at LIBOR plus 120
  • $34 million AA tranche priced at LIBOR plus 200
  • $28 million A tranche priced at LIBOR plus 300
  • $17 million BBB tranche priced at LIBOR plus 400
  • $15 million BB tranche priced at LIBOR plus 575, and
  • $39 million equity tranche

About BlueMountain Capital Management

BlueMountain Capital Management is an asset manager focused on the credit markets and equity derivatives markets. Andrew Feldstein, CEO/CIO, and Stephen Siderow, president, founded BlueMountain in 2003. Prior to founding BlueMountain, Mr. Feldstein spent 11 years at JP Morgan, where he was a charter member of the pioneering credit derivatives team. During his tenure at JP Morgan, Mr. Feldstein led a number of market-leading businesses, including Structured Credit, Structured Finance, High Yield and the JPM Global Credit Portfolio. Mr. Siderow was a management consultant in the financial institutions group at McKinsey & Co.  Messrs. Feldstein and Siderow met at Harvard Law School.

Feldstein and Siderow are joined by a veteran senior management team with decades of experience, including Senior Portfolio Managers Alan Gerstein, Bryce Markus and Derek Smith and COO/Head of Analytics and Technology, Michael Liberman. These senior partners have known each other for many years, working with each other at one or more of JP Morgan, Goldman Sachs and McKinsey & Co. BlueMountain has a team of more than 115 professionals in New York and London, which supports the firm's institutionalized and proprietary infrastructure. BlueMountain has been SEC-registered since its 2003 inception and is QPAM qualified.

BlueMountain's distinctive investment approach integrates fundamental company research, advanced quantitative methods and exceptional market and product knowledge. Its investment strategies range from highly fundamental to nearly pure arbitrage. BlueMountain has particular edge at the seams and intersections of a market that continues to be characterized by a high degree of artificial boundaries amongst instrument types and investment mandates.

SOURCE BlueMountain Capital Management