Fixed Income

CLOs are increasingly being used to finance portfolios of middle market/private credit loans in the US although, given this is not yet established in Europe, we focus on comparisons between the US and European Broadly Syndicated Loan (BSL) CLO markets.

Since its inception in the 1970’s, the global asset backed securities market has evolved beyond mortgage-backed assets to include loans secured by autos, equipment, credit card/personal loan receivables as well as high yield corporate loans. As the range of investment opportunities has grown, there is an opportunity for enhanced yield compared to similarly rated corporate credit.

This episode explores the ins and outs of private credit, including the options available, the risks, its behaviour as an asset class, valuation methods, and the role it can play within a portfolio.

In this month’s “What We’re Watching”, we provide our quarterly around-the-grounds perspective on public and private credit markets highlighting how the risk on rally that began in Q3 2023 may have run its course.

The team takes a trip down memory lane and discusses how staying open minded in the aftermath of the Global Financial Crisis allowed them to access highly attractive investment opportunities which other investors refused to even consider. The team draws parallels with the pricing of Collateralised Loan Obligations today arguing that they still offer additional returns as a result of a lingering negative perception connected to the performance of other structured finance securities during the GFC.

Pete Robinson recently joined Wilsons Advisory “Invest it Best” podcast to share insights on private credit, including its distinctions from public credit.

In this thought piece we discuss insecurity about cyber security, a risk factor that is increasingly relevant but remains underappreciated. We explore how to consider cyber risk in due diligence of individual investments, in portfolio construction, plus how to assess an investment manager’s preparedness to manage cyber risk at the fund level.

We provide our quarterly around-the-grounds perspective on public and private credit markets discussing the year that was plus the rates fuelled rally in risk markets which took place against a backdrop of deteriorating fundamentals.

CIM end 2023 with the team reviewing some of their favourite books, podcasts, Twitter follows and financial markets research. We hope you will find some interesting recommendations to enjoy over the holiday break.

This month we discuss the Federal Reserve’s Senior Loan Officer Opinion Survey on Bank Lending Practices otherwise known as the SLOOS. We highlight how it has historically provided a strong indication of recessions and market drawdowns and highlight where the tightening in bank lending standards is most pronounced.

Our quarterly perspective on public and private credit markets, APRA’s stance on bank capital and the ongoing pressures facing the non-bank lending sector.

We discuss warehouse lending, a sector which is receiving greater interest from global private credit investors despite not being particularly well understood.