Windhill: A Middle-Market CLOWindhill:AMiddle-MarketCLO

Overview

Windhill is a collateralized loan obligation (CLO) backed primarily by middle-market speculative-grade senior secured term loans, managed by PGIM Private Capital, PGIM’s manager of private fixed income and alternative portfolios.

Key Partners

• PGIM Private Capital
• PGIM Fixed Income
• PGIM Multi-Asset Solutions
• Prudential Financial Inc. 

Challenge

While continued economic and geopolitical uncertainty may cause some issuers to defer financing decisions, companies and sponsors value certainty of execution and trusted partners who can deliver in difficult conditions. PGIM Fixed Income’s strong securitization capabilities combined with the direct lending expertise of PGIM Private Capital and the collaborative efforts across Prudential helped pave the way for PGIM’s first-ever mid-market CLO. 

Approach

While the CLO market is well established, the private middle-market space remains small. Many firms will utilize private CLOs as a financing trade, but Windhill was conceived more as an investor-led platform as a way to ensure investors, in this case insurance companies, had exposure to direct-lending assets in a capital efficient, structured manner. 

Solution

The insurance company investors favored the asset profile of direct lending, and the CLO was structured to fit their needs. This was accomplished through:  

1. Delivering the assets in a capital-efficient manner
2. An open-ended construct that paired with their growth aspirations
3. Portfolio optimization allowing the investors to fine tune their risk/return across tranches relative to their total portfolio

 

Case studies are provided for illustrative purposes only and results may vary.