Western Alliance moves into CLO trustee business with aim of halving wait for reports

Sayed Kadiri

Editor

CLO trustees have come under fire recently but Western Alliance is looking to enter the space this year and make its mark by placing an emphasis on technology.

Tammy Bliek, senior vice president at the firm, says this could halve the time it takes to get CLO trustee reports to investors.

Western Alliance is familiar with the CLO market as an investor. Now parent company Western Alliance Bancorp is applying for its trustee licence and expects to work on levered loan facilities this year before progressing to US CLOs in the early part of next year.

The CLO and loan trustee business is being built out by senior director Jocelyn Lynch, who joined in April along with Bliek. They expect to have 20 staff on board when the trustee business goes live.

“We wanted to create something that relies on technological efficiency,” says Lynch, who notes that the CLO trustee industry has been hampered by a wave of staff resignations this year, as reported by Creditflux in June.

“We wanted to create something technologically efficient”

Jocelyn Lynch, Senior director | Western Alliance

This has led to delays in CLO trustee reports being published and, in some cases, trustees have informed arranging banks they are not taking on new mandates.

“By creating a workflow tool that connects all the different platforms needed to produce a trustee report, we can automate many processes,” says Lynch, who is based in Pennsylvania. “Our goal is not to be the number one CLO trustee by volume — we want to provide the best quality service.”

Although the contents of CLO trustee reports are determined by CLO indentures, Western Alliance expects to make these reports more presentable in appearance.

Houston-based Bliek says an important part of Western Alliance’s plan has been a close dialogue with 10 CLO industry veterans that have helped shape the firm’s new platform.

In Creditflux’s 2022 CLO Census, market participants were asked what they would change about the way the CLO industry operates — and many called for improvements in CLO trustee services.

Eight firms provide CLO trustee services, according to Creditflux data. BNY Mellon and US Bank are among the market leaders.

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Global credit funds & CLO's

November 2022 | Issue 250

Published in London & New York.