NewStar Financial announced today that it completed a $348 million term debt securitization known as NewStar Commercial Loan Funding 2014-1. All floating rate classes of notes were priced at par and the transaction was upsized from $325 million, reflecting broad participation among institutional investors.

NewStar Commercial Loan Funding 2014-1 is NewStar's eighth securitization since inception and part of a programmatic approach to the company's funding strategy. The notes offered through this CLO transaction are backed by a diversified portfolio of commercial loans originated by NewStar. The transaction was executed through a private offering via Rule 144A and Regulation S. Various classes of notes rated Aaa through Baa3 totaling approximately $290 million were placed and NewStar retained Ba2 and B2 rated notes in addition to the equity interests, which together represented approximately 17% of the capital structure, or approximately $59 million. The deal was structured to comply with European risk retention rules and included a small fixed rate tranche, rated Aa2, to meet specific investor demand.

"Our ability to generate strong demand for the deal from a range of global investors highlights the value of our direct lending platform and growing interest among institutional investors in the middle market. The quality of the execution also reflects our continued access to the capital markets and ability to expand and diversify our investor base," said NewStar CEO, Tim Conway. "Wells Fargo did an outstanding job structuring and marketing the deal to drive the best execution."

"With NewStar's well-established position as a programmatic CLO issuer and the market's strong receptivity to the deal, we were able to upsize the transaction and price the deal at attractive levels, setting a new 2014 pricing benchmark with the senior tranche of the deal," said John Frishkopf, head of asset management and treasury at NewStar. "We were also pleased by our ability to tap a broad range of investors by meeting risk retention requirements through continued capital commitments to our balance sheet securitization program," he added.

NewStar Financial will serve as manager of the CLO, which has a four-year reinvestment period. The notes were rated by a single agency. All notes were priced to yield a weighted average of LIBOR plus 2.32%.

Wells Fargo Securities was placement agent and sole book runner.

NewStar Financial (Nasdaq:NEWS) is a specialized commercial finance company focused on meeting the complex financing needs of companies and private investors in the middle markets. The Company specializes in providing a range of senior secured debt financing options to mid-sized companies to fund working capital, growth strategies, acquisitions and recapitalizations, as well as equipment purchases.