(Bloomberg) -- Atlas SP Partners, the structured credit business of Apollo Global Management Inc., has set up a subsidiary that will borrow money, and three major bond graders have given blue-chip credit ratings to the unit.
The unit, Atlas Warehouse Lending Company, provides temporary financing for loans that are going to get bundled into bonds. Atlas SP expects the unit’s portfolio of loans to grow to $30 billion over two years from its current $6 billion, according to Moody’s Ratings, one of the three firms giving it investment-grade ratings.
Apollo bought Atlas SP from Credit Suisse Group AG last year. Bloomberg reported in August that Jay Kim, who had led the business since 2016, was stepping down.
In recent months, Atlas SP has been raising capital and building up the business. It lined up $5 billion of financing from BNP Paribas that could grow over time, and $5 billion of equity from institutional investors including Massachusetts Mutual Life Insurance Co. and Abu Dhabi Investment Authority. It also secured a broker-dealer license to allow it to start trading securities.
Moody’s, S&P Global Ratings and Fitch Ratings gave Atlas Warehouse Lending Company ratings in the lowest tier of investment grade. The unit is also looking to get a $1 billion revolving line of credit by the end of this year that can increase to $1.5 billion, according to Moody’s. It already has a $1 billion subscription credit facility that expires in 2026, the bond grader said.
“This milestone is an additional validation of our track record and business model and will provide increased financial flexibility in serving our clients,” an Atlas SP spokesperson said in an emailed statement.
AWLC is expected to become Atlas’ primary funding vehicle for its assets, Fitch analysts wrote in its report.
Credit Suisse’s securitized products business dated back to the early days of mortgage bonds in the 1980s, and became one of the investment bank’s riskiest and most lucrative units. Atlas is central to Apollo Chief Executive Officer Marc Rowan’s ambitions to build a credit machine that rivals Wall Street banks.
In recent weeks, Atlas has helped sell asset-backed bonds tied to Pagaya Technologies Ltd.’s consumer loans and Octane Lending’s powersports equipment debt, according to data compiled by Bloomberg News.
(Updates with recent Atlas ABS deals in last paragraph. A previous version of this story was corrected to include additional investors in fourth paragraph.)
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