American International Group Inc. has returned to the red-hot collateralized loan obligation (CLO) market as an asset manager with its first sale since the financial crisis.
The $500 million transaction is being arranged by Credit Suisse Group AG, and its most senior tranche was graded by S&P Global Ratings, Fitch Ratings, and Morningstar Credit Ratings.
In May, the insurance giant purchased Charlotte, North Carolina-based Covenant Credit Partners, a small CLO manager led by industry veteran Marc Boatwright, to broaden its reach into the broadly-syndicated leveraged loan asset class. AIG had spun off its asset management arm in March 2010 to Pacific Century Group, which was renamed PineBridge Investments LLC.
AIG’s last deal prior to the crisis was called Galaxy X CLO, managed by Lehman Brothers and sold in February 2008, according to data compiled by Bloomberg. The spun-off PineBridge then took over the series and issued its first post-crisis deal, Galaxy XI CLO, in July 2011.
Boatwright has an investment team of eight and works alongside portfolio manager Milen Shikov, who oversees the structured credit group, to structure and fund new CLO vehicles, according to an investor presentation from November.
AIG Investments has $324.2 billion in assets under management, including $13.1 billion in leveraged loans and CLOs AUM, according to the presentation, with 28 employees dedicated to those areas. It has also invested $80 million of first-loss capital in two warehouse facilities totaling $400 million of par bank loan investment capacity as of the third quarter of 2018, the presentation said.
AIG is a major issuer of both life insurance and annuities.
Some of the major users of CLOs are life insurance company asset managers.
A representative for AIG didn’t immediately respond to a request for comment.
—With assistance from Lisa Lee and Sarah Husband.
— Read ‘Collateralized Loan Obligations’ Are a New Way to Invest in Commercial Real Estate, on ThinkAdvisor.