MGM studio common in CLOs, but losses limited-S&P

NEW YORK, Nov 3 (Reuters) - Metro-Goldwyn-Mayer's failure to make an interest payment on its loans is likely to have only a limited affect on structured deals, in spite of MGM being among companies most commonly included in the structures, Standard & Poor's said on Tuesday.

Privately owned Metro-Goldwyn-Mayer, home to a renowned film library including the James Bond movies, said last month it had reached a forbearance agreement with its lenders after missing a payment due on its loan on Sept. 30.

The agreement, which expires Dec. 15, exempts it from interest payments of an undisclosed amount as it continues discussion with lenders to develop a new capital structure and support a long-term business plan. For more see [ID:nN01541132].

Payments on its credit default swaps, however, were triggered by the missed payment.

MGM is one of the top 10 companies in Collateralized Loan Obligations rated by S&P, and is held in more than 350 of the deals in the U.S. and six in Europe, S&P said.

CLOs are portfolios of loans that are divided into pieces of varying risk and returns.

Most CLOs, however, have only limited exposure to MGM, at less than 2 percent of their exposure, S&P said.

In addition, 20 U.S. synthetic Collateralized Debt Obligations, which are backed by credit default swaps, reference the company, S&P said.

CDSs are used to protect against a borrower defaulting on their debt or to speculate on their credit quality.

An auction is scheduled for Nov. 10 to determine the value of CDSs insuring MGM's loans.

MGM was taken private in $2.85 billion buyout in 2005 by a group including private equity firms Providence Equity Partners, TPG (TPL.N), DLJ Merchant Banking Partners, a unit of Credit Suisse (CSGN.VX), and Quadrangle Group, in addition to media companies Sony Corp (6758.T) and Comcast Corp (CMCSA.O).

(Reporting by Karen Brettell; Editing by Andrew Hay)