AMR utilizes a modified Dutch auction procedure to set the new interest rate on each participating class of CLO securities.
[1][2][3] AMR was originally developed by Sancus Capital Management,[1] an active investor in the CLO market not only as means to increase the efficiencies and reduce the costs of Traditional Refinancings, but also as a means for CLOs whose original issuance date predated the effective date of the U.S. risk retention rules to avoid being subject to the U.S. risk retention rules as a result of a Traditional Refinancing.
Like Traditional Refinancings, the AMR procedures can be initiated at the direction of the holders of a majority of the Subordinated Notes of a CLO or by the Collateral Manager.
The ASP provides the platform for the submission of bids by participating member broker-dealers who are preapproved trading counterparties of the AMR settlement agent.
After the new applicable margin is established, the securities comprising each relevant AMR Class are mandatorily tendered pursuant to Depository Trust Company (DTC) protocols.