TRLPC: Antares' $13.9B buyout loan includes jumbo asset-backed credit
By Leela Parker Deo and Kristen Haunss
NEW YORK, July 31 (Reuters) - Antares Capital is in the market with $13.9 billion of senior secured credit facilities backing its sale to Canada Pension Plan Investment Board (CPPIB) from General Electric Capital Corp, which include a jumbo $10.7 billion asset-backed loan.
The financing, which will also help fund the middle market private equity lender's future growth, is backed by Antares' portfolio of term loans and revolving credits to U.S. middle market companies.
The secured financing stands out due to its size, and its asset-backed structure, which allows Antares to diversify its funding sources in the future by issuing a range of debt instruments via the securitization and unsecured debt markets, according to Fitch Ratings.
"It is easy to get secured financing quickly from banks," said Meghan Neenan, a senior director at Fitch, adding that the execution makes sense in terms of economics and efficiency.
The structure of the deal resembles a warehouse facility used for Collateralized Loan Obligation (CLO) funds to gather assets, Neenan said. The ratings agency expects the deal to be "termed out" by issuing a series of CLO funds over time.
Middle market lenders, which include specialty finance companies and Business Development Companies (BDCs), often issue CLOs as one of several vehicles they use to fund investments in portfolio companies.
Antares previously used CLOs to fund investments but stopped after its acquisition by GE Capital due to GE's lower funding costs, Neenan said.
CPPIB's $12 billion acquisition of Chicago-based Antares vaults Canada's largest pension fund into the top tier of U.S. middle market lenders and marks GE Capital's exit as the dominant player in that space. Continued...