Leveraged Finance Assets

We define leveraged finance assets as debt obligations of issuers rated Baa2 / BBB and lower by Moodys and S&P. The assets are generally traded OTC and include senior secured bank loans, mezzanine notes, and high yield bonds. While interest-paying, the valuation of leveraged finance credits is generally less sensitive to the macro interest rate environment than investment grade credits.

Instead, the valuation of leveraged finance assets is driven by the credit story of the underlying issuer - its cashflow, management, leverage, market position, etc - and the general economic environment. The key to understanding whether a credit is properly valued or not is having the ability to tear apart the story and analyze the credit from the bottom up. Our investment team has an average of over 15 years experience doing just that - performing extensive due diligence before investing and close monitoring after investing. Each of our investment specialists also has experience in portfolio management and trading.

It is our view that the leveraged finance market generally follows a four year cycle composed of: two years of a relatively directionless market, one year of a bear market followed by one year of a bull market. Being nimble and able to react to the changing market cycle are key to investing successfully across the different cycles. Our investment specialists have invested through several cycles and have portfolio construction and trading experience in different market scenarios.