Apollo Global Management (NYSE:APO) believed to Sell $325 Million Loan Fund - C, HTZ & CPN

Northern, WI 1/26/2013 (avauncer) - Apollo Global Management LLC (NYSE:APO) is planning to sell a $325 million secured loan outstanding. It borrowed the money in 2010 once the fund closed its reinvestment duration. The company is looking for buyers for around $200.4 million value of loans lent to around 100 borrowers which include Calpine Corp. (NYSE:CPN) and Hertz Corp. (NYSE:HTZ), for which the ALM Loan Fund of 2010-1 CLO is still applicable. Last day for bids is tomorrow at 11 a.m. in New York.

Apollo (NYSE:APO) is winding up the fund once loan prices went up 11.5% from the beginning of 2010, as denoted by S&P/LSTA U.S. Leveraged Loan 100 Index. The fund closed its reinvestment duration (the period in which it can purchase new loans) last year.

If a CLO exits this duration, it has to use cash in order to repay the debt instead of purchasing new loans. Around 80% of current CLOs will complete their reinvestment time towards end of 2014, as per analysts’ data. The spokesman for Apollo (NYSE:APO) Charles Zehren did not elaborate on the matter.

Apollo (NYSE:APO) managed assets worth $109.7 billion as on Sept. 30, administered 26 CLOs as on June 30, as per various news releases. The lowest part, also called the “equity slice” of the ALM CLO, can give over 15% returns once the sale starts. Apollo (NYSE:APO) sold the first deal worth the $325 million, to Citigroup Inc. (NYSE:C) in May 2010.

The list of bids for the Apollo (NYSE:APO) CLO comprises of a $5.7 million portion of Asurion Corp.’s term loan, a $4.5 million portion of Freescale Semiconductor Inc.’s loan and $4.9 million of Cengage Learning Inc.’s loan.

The deal was the first supported by broadly syndicated loans taken in 2010, in which only $3.5 billion of loans were lent. Altogether there were $52.6 billion of these types of  deals made last year. During the market highs in 2007, $91.1 billion of CLOs secured by broadly  syndicated loans were given..

CLOs are a kind of secured debt obligation where risky, high-yield are collected and divided into securities of varying risks and returns. These funds are the biggest purchaser of leveraged loans, and comprise $500 billion market comprising of mergers and acquisitions.

The shares of Apollo (NYSE:APO) went up by 1.19% to close at $21.26.

The shares of Citigroup Inc.(NYSE:C) were up by 0.26% to close at $42.91

The shares of Hertz Corp. (NYSE:HTZ) were up by 1.23% to close at $18.12

The shares of Calpine Corp. (NYSE:CPN) were up by 0.68% to close at $19.14