York CLO-1 has been redeemed, and its equity tranche is expected to surpass the 12% IRR threshold, leading the manager to receive an incentive fee. The redemption of this deal in today’s market conditions highlights its strong performance. To put things in context, around 85% of 2.0 deals were fully redeemed when the Morningstar LSTA US B/BB Ratings Loan Index was at $97 or better.
Over a period of around 8.5 years, this deal’s annual distribution has been solid, averaging 16.3%. This consistent and impressive performance adds to the evidence of the deal’s success. The last equity distribution for this deal was 3.6%, and its AAA tranche factor was 0.67 as of 12 July 2023.
Given its outstanding annual distribution, which places it among the top quartile for 2015 vintage reset deals, this particular deal does not necessarily need to achieve a high final equity NAV to secure a good final IRR of at least 12.0%. The final equity NAV is expected to be in the low-30s.
It’s worth mentioning that this deal was active during a substantial period of historically low-interest rates, making its low-teens IRR quite impressive.
Overall, the redemption of York CLO-1 in the current market climate showcases its successful track record and serves as a testament to the strength of its performance throughout its 8-9 years of existence.
Related articles:
Assessing the Performance of Equity Tranches in Reset US CLO Deals
US CLO Manager Report: Generate
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The information, research, data, research related opinions, observations and estimates contained in this document have been compiled or arrived at by CLO Research Group, based upon sources believed to be reliable and accurate, and in good faith, but in each case without further investigation. None of CLO Research Group or its service providers; authorised personnel, or their directors make any expressed or implied presentation or warranty, nor do any of such persons accept any responsibility or liability as to the accuracy, timeliness, completeness or correctness of such sources and the information, research, data, research related opinions, observations and estimates contained in this document. All information, research, data, research related opinions, observations, and estimates in this document are in draft form as of the date of this document and remain subject to change and amendment without notice. Neither CLO Research Group nor any third-party providers shall be subject to any damages or liability for any errors, omissions, incompleteness or incorrectness of this document. This article is not and should not be construed as an offer, or a solicitation of an offer, to buy or sell securities and shall not be relied upon as a promise or representation regarding the historical or current position or performance of any of the deals or issues mentioned in it.
