€500m bonds secured by loans

HARBOURMASTER Capital Management, a Dublin-based asset manager, plans to sell €500 million of bonds secured by loans used to finance leveraged buyouts, according to a report by Fitch Ratings.

The collateralised loan obligation will be sold in seven portions of varying risk, with three pieces carrying the top AAA ratings, Fitch said. The loans backing Harbourmaster’s CLO pay average interest of 2.3% points over interbank rates.

CLOs, a form of collateralised debt obligation, package loans and use their income to pay investors.

In leveraged buyouts, firms put up a little of their own money and borrow the rest, piling debt onto the company being acquired.