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News
News in brief
Octaura preps for tranche trading launch after success of loan platform
Octaura, the electronic trading platform that has been shaking up the leveraged loan market, is advancing its plans to launch CLO tranche trading this year.
The firm began life as a co-development between Bank of America and Citi to address the technological challenges in the syndicated loan market. It launched as a separate company in 2022, and now provides leveraged loan market participants with access to data and analytics, trading execution and booking on a single platform.
According to CEO Brian Bejile, electronic loan trading is picking up quickly. “In a year, we’ve gone from having three dealers on our loan trading platform to 16, and from 34 buy-side firms to 109,” he said. Octaura now sees quotes from between 1,100 and 1,400 names each day.
The 109 buy-side clients active on the loan platform are almost entirely CLO managers, and Octaura has long held ambitions to launch a CLO tranche trading product, aiming to replace the little-loved BWIC system. “I’ve traded tranches for 18 years. I know the biggest challenge is in disparity of information,” said Bejile. “My goal is to simplify the way auctions work for everyone, whether that’s gathering price talk or seeing post-trade colour.”
Plans are underway to officially launch CLO trading later this year, in a similar fashion to the loan trading business. “CLOs are different from leveraged loans. As bonds they’re regulated, and have to be traded by our broker/dealer. But we’re in beta now and trades are happening,” said Bejile.
Octaura has a wealth of experience. At Citi, Bejile was global head of CLO issuer management.
Investors target Africa amid growing population and financing gaps
Africa might be one of the last frontiers to capitalise on the global private credit rush. But the continent’s growing population, coupled with regional banks continuing to pull back, has created space for alternative financing in the region. A number of managers are now looking to set up private credit funds this year to take advantage of the opening gap.
Joseph Mate, investment director focusing on emerging markets in private credit at British International Investment, said his firm is currently helping raise capital for at least three African private credit funds that hope to launch this year. In addition, at least one or two South African pension systems have taken an interest in committing capital as well.
“There is a financing gap in Africa for mid-sized businesses,” said Mate, who added that private credit in Africa will likely continue to grow.
In fact, the continent’s population is expected to nearly double to 2.5 billion people by 2050, while GDP is expected to rise from USD 3.2tn to more than USD 4.2tn by 2027.
That’s enough for some firms to place bets on the region. In April, South Africa’s Rand Merchant Bank revealed that it has contributed USD 100m to an infrastructure debt fund managed by London-based Acre Impact Capital.
With little regional competition, it’s the perfect place for investors and asset managers who are familiar with the territory, says Kobi Sam, managing director at Ninety One, which launched an infrastructure credit fund in March aimed at the South African market.
Lupus alpha celebrates as CLO fund surpasses €100m NAV
Fresh from its success at the 2024 Creditflux CLO Manager Awards, where it took the prize for Best CLO Fund under USD 150m, Lupus alpha has hit another milestone. Earlier this month, the Frankfurt-based asset manager saw the NAV for its flagship mutual fund, Lupus alpha CLO High Quality Invest A, surpass the EUR 100m mark for the first time.
This is a notable achievement for portfolio manager Michael Hombach and team, including Norbert Adam, Stamatia Hagenstein and Dr Klaus Ripper.
Launched in July 2015, the fund is tailored to regulated institutional investors, such as insurance companies and pension funds, but is also open to non-regulated investors. As part of its compliance with the German Insurance Supervision Act (VAG), the fund cannot buy high-yield CLO assets. It is also compliant with UCITS, an EU-wide regulatory framework for financial investments.
Most of the fund’s growth has come in recent years. At the beginning of 2021, it had around EUR 30m of assets under management — a similar valuation to 2015. “We’ve seen constant growth since then to where we are now, at EUR 103m,” Hombach said. “I think more investors have realised that some diversification, even within the fixed-income universe, makes sense.”
Hombach highlights the structural spread benefit of the fund in comparison to investment-grade corporates. “In the current interest rate environment, with IG CLO investments you are earning roughly four times the correspondingly-rated corporate bond spread,” he said.
Top stories on creditflux.com: from promising debuts to unexpected returns
15 May 2024
Packed CLO conference hears about violence and new issues
By the lunch break more than 600 delegates had checked in for the Creditflux CLO Symposium 2024 in London, the flagship conference for the global CLO market.
The impressive first-quarter issuance has more room to run, said panellists at the morning sessions. But with the context of its increasing prevalence in the US, lender-on-lender violence was also discussed as a looming threat in the European market.
The symposium was held at the London’s Landmark Hotel and broadcast live at community.ionanalytics.com
3 May
First debut manager of 2024 prices
May saw the pricing of Monument CLO 1, the inaugural deal from London-headquartered alternative credit specialist Serone Capital, arranged by Bank of America. Serone is the first market debutant to emerge this year.
6 May
Capital Four loses US CEO
Jim Wiant left CLO manager Capital Four. Based in New York, he was CEO of Capital Four US, and a senior portfolio manager at the Danish asset manager.
6 May
Palmer Square prices billion-dollar static CLO
In early May, Palmer Square Capital Management priced a new billion-dollar static US CLO, with Citi acting as arranger.
6 May
Capital Four announces new US business head
Following the news that US CEO Jim Wiant left Capital Four, it broke that Ami Dogra has been promoted to lead the US business at Capital Four, including its US CLO business. Dogra, also based in New York, joined the firm in 2021 from Citadel.
8 May
West Coast CLO investor leaves firm
American Century Investments lost its CLO portfolio manager Jesse Singh who departed to pursue other opportunities.
9 May
DWS grows CLO team in Europe with senior hire
Max Elliott-Taylor, an executive director and portfolio manager of CIFC’s European CLO business, moved to DWS, which is set to unveil a European CLO management platform later this year.
10 May
The Last Tranche with Ymer’s Warzynski: we like primary equity again
Hubert Warzynski, partner and co-founder of Scandinavian CLO investor Ymer, talked on our podcast about why he likes primary European equity again, but only for a handful of managers.
17 May
CLOs and private credit can learn to coexist, conference hears
Our CLO Symposium brought together an audience of lawyers, CLO managers and private credit players to discuss the battle between two markets.
21 May
Private credit veteran returns to Barings
Barings began rebuilding its private credit team with the return of veteran credit professional Bob Shettle, rehired by the global asset manager in New York.
29 May
Hayfin raises new direct lending fund while narrowing potential buyer list
Hayfin Capital Management began fundraising a new European direct lending fund even as it narrowed down a list of potential acquirers to buy the firm.
Past returns
Still waiting for the tiers
Five years ago we wrote “Market bemoans Europe’s lack of CLO manager tiering”. The senior spread between the tightest and widest names in Europe in 2019 was eight basis points, and the lack of tiering was reported to have far-ranging consequences.
Well, the bad news is that at the triple A level things are the same as ever. In April and May every new European CLO also priced within an eight basis point range, with the exception of Serone’s debut CLO — which was only 14bps wide of the benchmark.
But in the European mezz space things are at last beginning to change.
Points up front
Hit for six by cricket
The T20 Cricket World Cup is providing a rare opportunity for fans in New York to enjoy the one sport in the world with more laws than a CLO indenture.
Last week, 34,000 fans squeezed into a temporary stadium on Long Island to watch the most anticipated match so far, India versus Pakistan, and we hear that at least one global CLO head at a major arranger took advantage of the opportunity to share their love of the sport with some CLO clients.
We also hear the day was such a success that the same group are already looking ahead to the world cup final, which will be held in Bridgetown, Barbados on 29 June. Hopefully by that time the clients will know their square legs from their silly points.
India versus Pakistan: it’s simple, the batter came out because he was in, but now he’s out
Feeling gloomy in the sun
Are European CLO people ever happy? The primary market is booming, with new issuance through the roof and the first signs of a reset/refi wave coming. But even the combination of that and three days of partying in the sun in Barcelona couldn’t cheer up everyone at the AFME & Invisso Global ABS conference in June.
Instead, our reporters found concerns about the market overheating, about the lack supply, and about hidden risks lurking under the frothy waves.
Come on folks. Let’s enjoy a few months of positivity while we can.
