#United States #New York #private credit #Deerpath Capital #CLO 2022-1

Deerpath Capital Management Achieves a Historic CLO Reset

In a significant move for the financial industry, Deerpath Capital Management, LP, based in New York, has successfully reset its 2022 Collateralized Loan Obligation (CLO), marking a historic moment in the firm's journey. This $724.7 million reset represents not only the largest CLO in Deerpath's records but also the largest upsize the firm has managed to date.

Originally priced at $373 million when issued in May 2022, the recent transaction highlights Deerpath's active involvement in the market. This reset is particularly notable as it is the first of its kind for Deerpath CLO 2022-1 and brings the total assets under management by the firm to approximately $3.7 billion. Over the years, the firm has issued 13 CLOs since 2018, demonstrating its robust presence in the lower-middle market private credit sector.

Impact of the CLO Reset

The reset of the Deerpath CLO 2022-1 is indicative of the firm's ongoing strategy to capitalize on favorable market conditions. As noted by Derek Dubois, Managing Director and Treasurer of Deerpath, this transaction highlights the opportunities present in the CLO market in 2024. "We were able to opportunistically reset and upsize our 2022 CLO on very attractive terms for our fund investors," he commented.

This transaction represents the fourth CLO issuance for Deerpath in 2024, with total CLO issuance for the year reaching around $2.0 billion. Included in this total are other successful reset transactions, such as the Deerpath CLO 2018-1, which was reset to $402.8 million in August, and Deerpath CLO 2021-1, reset to $402.9 million in July. These transactions solidify Deerpath’s active role in the financial landscape as it adapts and responds to changing market dynamics.

The Deerpath CLO 2022-1 is secured by a well-structured portfolio comprising senior secured loans originating from middle-market, private equity-backed companies. The firm has maintained a track record of directly originating loans, which are critical to the portfolio's strength.

Investors and Market Response

Deerpath sold securities rated from AAA through BBB- to a variety of institutional investors, including banks, insurance companies, pension funds, and asset managers worldwide. In a testament to their strategy, Deerpath's managed funds purchased all subordinated notes generated from this CLO. The transaction, concluded on December 10, 2024, will allow for a reinvestment period ending in 2029, a strategic move designed to optimize investor returns over the long term.

The placement agents who facilitated this transaction, including GreensLedge Capital Markets LLC and NatWest Markets Securities, played a vital role in pricing the upsized reset, which has nearly doubled the initial notional size of the CLO.

About Deerpath Capital Management

Founded in 2007, Deerpath Capital Management has established itself as a leading player in the private credit market, specializing in providing customized, cash-flow-based senior debt financing to lower-middle-market companies across a diverse array of industries. With approximately $8 billion in assets under management, the firm continues to evolve and expand its footprint in the financial services sector. For further information, visit Deerpath Capital's website.

This successful resetting of CLO 2022-1 reaffirms Deerpath's strategic positioning and its commitment to delivering value to its investors amidst a complex financial landscape.