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March 17, 2017  

Securitization Pros Tackle Diamond Deal

Investment-banking firm Castle Placement is shopping a securitization of trade receivables tied to an unusual asset: diamonds.

Castle Placement began showing the deal to investors at the Structured Finance Industry Group’s “SFIG Vegas 2017” conference, held Feb. 26-March 1 in Las Vegas. The privately placed transaction is expected to total about $220 million and carry a single-A rating from Kroll. It likely will price in May, with Guggenheim running the books.

The issuer is Diambel, a diamond wholesaler based in Antwerp, Belgium. Diambel acts as a middleman between mining companies including De Beers and jewelry retailers, with a specialty in smaller, lower-quality diamonds.

The planned bond offering presumably would be underpinned by payments Diambel is owed from retailers. Sources said the securitization would employ a revolving trust, similar to deals backed by credit-card receivables. The word is that the issuer could be good for one or two deals per year.

Castle Placement has told investors that Diambel had been financing its business via a bank warehouse facility. But the bank recently withdrew the credit line as part of a broader pullback from financing commodity businesses in response to regulatory-capital changes under the Bank for International Settlements’ Basel 3 rules.

Spearheading the marketing effort at Castle Placement is managing director Ken Hackel, who joined the New York firm in June following a stint at CRT Capital as head of securitized-product strategy.

Castle Placement is led by securitization veterans Richard Luftig and Ken Margolis. Margolis’ resume includes a stint as co-head of collateralized debt obligation banking at Merrill Lynch and sime time as a structured-product trader on Credit Suisse’s proprietary-trading desk. Luftig was a senior executive at Bear Stearns, where his duties included head of structured-product distribution in North America.