NEW YORK, Oct. 15, 2015 (GLOBE NEWSWIRE) -- StoneCastle Financial Corp. (Nasdaq:BANX) ("StoneCastle Financial" or the "Company"), an SEC registered closed-end management investment company, today announced an investment in Community Funding CLO, Ltd. ("Community Funding" or the "CLO"), a bank credit collateralized loan securitization. The Company invested $45.5 million in Preferred shares issued by Community Funding which closed on October 15, 2015.
The CLO was structured in two tranches: $205.0 million of senior secured Class A Notes rated A3 by Moody's Investors Service and $45.5 million of unrated Preferred Shares, for a total issuance of $250.5 million. The collateral has an average yield of 7.00% and the Class A Notes initially pay a fixed rate coupon of 5.75%. The net proceeds of this CLO were primarily used to fund direct capital investments into 35 community and regional banks from 24 different states. These banks can use this capital to support nearly $2.5 billion of local lending, fund acquisitions or refinance more expensive capital.
Community Funding, arranged by Citigroup as sole manager, is the first pooled bank credit securitization to close since 2008. The original form of pooled bank credit securitizations, TruPS CDOs, were created and first issued by Salomon Smith Barney (now Citigroup) in 1999 by the founders of StoneCastle Partners, LLC, who formerly worked at Citigroup. TruPS CDOs accounted for over $40 billion of community bank capital issuance between the years 2000-2008. The credit crisis of 2008, paired with regulatory changes to bank capital rules, effectively halted issuances of such investment vehicles.
StoneCastle Investment Management, LLC, an affiliate of StoneCastle Partners, LLC, is the servicer for the CLO. This innovative investment solution for bank capital has once again opened the door for community banks to access Tier 2 qualifying capital from the capital markets.
This press release contains statements that are not historical facts and are forward-looking statements based on current management expectations involving substantial risks and uncertainties that could cause actual results to differ materially from the results expressed in, or implied by, these forward-looking statements. Actual future results may differ significantly from those stated in any forward-looking statement, depending on factors such as changes in securities or financial markets or general economic conditions, the volume of sales and purchases of shares of common stock, the continuation of investment advisory, administrative and service contracts, and other risks discussed from time to time in StoneCastle Financial's filings with the SEC.
About StoneCastle Financial
StoneCastle Financial is an SEC registered non-diversified, closed-end investment company listed on the NASDAQ Global Select Market under the symbol "BANX." StoneCastle Financial intends to make long-term, passive, non-control investments in community banks seeking capital for organic growth, acquisitions, share repurchases and other refinancing activities. Its investment objective is to provide stockholders with current income and, to a lesser extent, capital appreciation. StoneCastle Financial is managed by StoneCastle Asset Management LLC.
CONTACT: Investor Contact: Julie Muraco 347-887-0324
Source:StoneCastle Financial Corp.