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GoldenTree Asset Management raises $725m in commitments for second CLO strategy

Thursday, February 04, 2021
Opalesque Industry Update - GoldenTree Asset Management, a global credit manager, announced the closing of $725 million in commitments on a second CLO strategy (GLM II) as part of its GoldenTree Loan Management (GLM) program. GoldenTree previously raised $600 million in 2016 for the first vintage of the strategy.

Over 60% of investors in GLM II are returning investors from the first vintage of the strategy. Many of GLM II's investors increased the size of their commitment relative to the previous vintage given the attractive return profile. "We are honored that so many investors in our first CLO equity strategy have again entrusted us with their capital and we thank them for their partnership," said Steve Tananbaum, Founding Partner and Chief Investment Officer. "CLOs and CBOs have been an important product offering of GoldenTree's for more than 20 years. We are proud of our results and are well positioned to continue to deliver differentiated performance in the product."

GoldenTree's GLM program originated in 2016 with the objective of capturing the firm's top decile track record in CLO equity and further enhancing returns given its unique approach to CLO execution. The vehicle's structure enables GLM to take on additional responsibilities that simplifies the role of banks, leveraging their core competencies and driving significant efficiencies in the execution of CLOs.

In addition, GLM CLOs are intended to comply with European Risk Retention regulations, enabling participation by the broadest universe of investors. Furthermore, it enables GoldenTree to opportunistically and actively manage the strategy's underlying assets and liabilities. As a result, GoldenTree believes it can enhance the returns for the CLO equity held by GLM. GoldenTree's approach has proven successful, with an average net IRR since inception in the GLM program in the mid-teens as of December 31, 2020.

Furthermore, the GLM program has made distributions of over 15% per annum, illustrating the attractive carry that can be generated in the strategy. Since inception, GoldenTree has never missed a BSL CLO equity distribution, allowing the GLM program to maintain its high profile of current income. Only a fraction of the CLO manager universe has achieved this result, which is driven by GoldenTree's active management of the loans within its CLOs.

GLM's innovative structure enables a broad base of institutional investors to access GoldenTree's CLO strategy, and as a result GLM has a diverse global investor base and includes participants from the US, Europe, and Asia Pacific. The investor base is further diversified by type, with participation from sovereign wealth funds, corporate and public pension funds, insurance companies, foundations and family offices. The GLM program also benefits from a strong alignment of interest, with broad participation by GoldenTree partners and employees.

Since its inception in 2000, GoldenTree has issued nearly $20 billion of CLOs, with approximately $11 billion currently outstanding. GoldenTree's strong historical CLO performance is in large part due to its security selection and active management of its loan portfolios. The investment team is comprised of over 60 individuals with, on average, 16 years of experience. In addition, GoldenTree has been an active investor in structured credit since 2007 and currently manages over $6 billion of structured products investments across the firm.

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