Opinion
June 2020 | Issue 224
Past returns
Indirect lending
Five years ago in Creditflux we reported how banks were playing a role in European direct lending — an industry borne out of the fact that banks had reduced appetite for lending to small and mid-sized companies. Credit Suisse and Royal Bank of Scotland (now NatWest Markets) were getting indirect exposure by lending to direct lending funds.
More recently, Credit Suisse has engaged in co-investments alongside institutional investors. And syndicated financing has now evolved to the point where BeSpoke Capital produced the first CLO backed by SME loans in November.
Points up front
We knew it, Jon Snow
When Tripp Smith, the co-founder of GSO Capital Partners, launched asset manager Iron Park Capital Partners a year ago we guessed he might like TV series Game of Thrones and headlined our piece: GSO founder takes Iron throne with new manager launch (15 May 2019).
It turns out we were on the money. Iron Park’s debut offering, WIC Fund, drew inspiration from the ‘winter is coming’ motto associated with the fantasy drama. Iron Park is now turning its attention to a follow-up credit fund known as WIN, or ‘winter is now’.
A three-eyed raven tells us that Iron Park has invested in corporate loans and high yield shorts. The distressed play has paid off with WIC said to have gained 57.1% through to the end of March.
No doubt the firm was long Lannister. Because, as we all know, a Lannister always pays its debt.
Game of Thrones: eight series are out as video; only one is available as a credit fund
Senior tranches pay down despite junior OC passes
192 US CLOs have breached at least one over-collateralisation test, according to CLO-i, but at least two deals have not followed the conventional path. Longfellow Place CLO, managed by First Eagle Investment Management, and Oaktree US CLO 2014-1 are failing senior-most OC tests but passing junior ones.
These quirks came about as part of resets, where senior OC cushions were not increased, or only slightly increased, while junior OCs were bumped up.
THEY SAID IT
“There will be a re-tiering of managers after this”
Pierce Derkac, CLO trader at Brean Capital in New York, suggested on a webinar hosted by Kopentech that a CLO manager considered tier one today might end up losing that status based on how they perform during the coronavirus crisis.
Global credit funds & CLO's
June 2020 | Issue 224
Published in London & New York.
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