Daily News: September 13, 2013

NewStar Taps Securitization Market for $400MM

NewStar Financial said it completed a $400 million term debt securitization known as NewStar Commercial Loan Funding 2013-1. All classes of notes were priced at par and the transaction was upsized from $350 million, reflecting broad participation among institutional investors.

NewStar Commercial Loan Funding 2013-1 is NewStar’s seventh securitization since inception and part of a programmatic approach to the company’s funding strategy. The notes offered through this CLO transaction are backed by a diversified portfolio of commercial loans originated by NewStar. The transaction was executed through a private offering via Rule 144A and Regulation S. Various classes of notes rated AAA/Aaa through BBB- totaling approximately $339 million were placed and NewStar retained BB and B rated notes in addition to the equity interests, which together represented 15% of the capital structure, or approximately $61 million. The deal was also structured with a variable funding note class, rated AAA, to provide valuable funding flexibility.

“Our ability to attract strong interest from significant new and repeat investors in this transaction underscores the strength of NewStar’s track record and the value of our direct origination platform. The quality of the execution also reinforces our access to the capital markets and ability to expand and diversify our investor base,” said NewStar CEO, Tim Conway. “Natixis did an outstanding job structuring and marketing the deal to drive the best execution.”

“The CLO market continues to provide attractive term financing for our balance sheet and this deal marked another important milestone for us,” said John Frishkopf, head of asset management and treasury at NewStar. “Due to the market’s strong receptivity, we were able to upsize the deal and price all tranches at par to achieve an attractive structure and all-in interest cost.”

NewStar Financial will serve as manager of the CLO, which has a three-year reinvestment period. The class A notes are rated by two rating agencies and classes B โ€“ G are rated by a single agency. All notes were priced at par with a weighted average yield of LIBOR plus 2.21%.

Natixis was placement agent and sole bookrunner.