The Netherlands' ABN Amro Bank NV announced the closing of its $5.5 billion corporate loan securitization Tuesday, the largest single collateralized loan obligation completed to date.
Known as the Loop Funding Master Trust, the issue includes only U.S. dollar assets and encompasses a variety of asset classes. It is structured to be primarily off-balance-sheet from an accounting and regulatory standpoint in the United States and the Netherlands.
The market for such issues has skyrocketed this year and is expected to top $35 billion in total volume, observers said. Collateralized loan obligations enable banks to divert capital that would otherwise be tied up in loans, or regulatory holdings against those loans, to more profitable investment.
London-based Natwest Group PLC's $5 billion R.O.S.E. Funding, issued in January, had been the largest collateralized loan obligation to date. NationsBank Corp.'s $4 billion issue in September remains the largest such offering by a U.S. bank.