FAIR : Fair Oaks 88% committed
Fair Oaks Income Fund says it plans to acquire $26m of equity notes that make up 51% of the equity of a new CLO, Covenant Credit Partners CLO II Ltd.
Covenant Credit Partners CLO II Ltd is a $500m CLO backed by a portfolio of broadly syndicated secured loans to 172 distinct borrowers (issuers) in the US – the average exposure to each issuer is 0.6%. The potential total return on the equity notes is said to be 15%-17% per annum.
Covenant Credit Partners, the manager, was set up in 2013 by ex ING man, Marc Boatwright. It has c$1bn under management.
With this deal, the master fund that Fair Oaks invests in will have 88% of the money from its IPO and secondary issuance invested – across 540 issuers in 40 industries – an average of 0.3% of assets in each issuer and with the top ten issuers accounting for 8.3% of the portfolio. The issuers are mostly (94%) based in the US.