The nearly $1.5 trillion CLO market represents one of the most successful innovations in structured finance, transforming a fragmented and lightly traded leveraged loan market into a standardized, rated and liquid asset class. The CLO vehicle allows efficient access to the broadly syndicated loan market, and the investment-grade tranches have historically generated excess safe spread for insurance company portfolios, delivering stronger risk-adjusted returns and lower realized losses than comparably rated corporate bonds.

In recent years, however, spreads have compressed in investment-grade CLOs as strong structural demand has meant more global investors pursuing the same opportunity set. At Athene, we’ve been steadily decreasing the size of our CLO portfolio for over a year. Rather than moving down the capital stack and taking increased risk for yield, we set out to create a new vehicle format that could build off the durability of the CLO while delivering higher rated, more diversified collateral in a structure with less leverage.

Introducing AMAPS

Apollo Multi-Asset Prime Securities, or AMAPS, is a structured credit product enabling access to more diversified and higher-credit-quality assets that are risk-managed every day. In comparison to US BSL CLOs, the vehicle has a thicker equity tranche and is approximately 85% investment-grade rated by leading agencies, with underlying collateral that is more diverse and significantly higher rated. It was structured with investors in mind.

With a 5-year term, AMAPS notes target an intermediate maturity. We are also developing longer duration variations of the AMAPS format (APADS) to address both the long-term asset needs that exist for insurance balance sheets, as well as the long-term capital demands of the global industrial renaissance.

The AMAPS Market

Similar to CLOs, AMAPS provides a transparent view of underlying collateral for investors, and each tranche has its own CUSIP. AMAPS notes are priced and traded daily in a liquid secondary market.

Like many innovations, we built the AMAPS product to address a specific need. For Athene, we wanted a modern CLO providing efficient access to higher quality collateral and safe yield, with less structural leverage. Today, significant holders of AMAPS include some of the world’s largest sovereign wealth investors, institutional investors and third-party insurers. These investors not only seek to address their risk/return needs but also value the alignment that comes with investing alongside Apollo or Athene, which is a significant investor in each of the underlying AMAPS tranches.

While we believe Apollo was uniquely situated to be a first mover in AMAPS as a manager of long-term capital with decades of asset-backed structuring expertise, we fully expect that over time this market will grow similarly to CLOs. This will mean multiple issuers of MAPS-type securities, and we are in discussions with third-party managers who want to create their own versions of MAPS. This should serve to generate attractive high-grade debt for investors and contribute to long-term market development.