[ad_1]
BG, Opalesque Geneva new manager:
A number of factors are driving the pipeline of credit opportunities, including rising interest rates, a deteriorating macro environment, reduced bank lending, and upcoming debt maturity walls that will require financing at much higher rates.
The term “debt maturity wall” dates back to 2010 and refers to a graduated and growing wall of corporate debt maturities that is collectively built over time.
Indeed, financing costs have increased sharply since the Fed began its tightening cycle in 2022, and refinancing needs have so far been subdued as companies issued large amounts of debt in 2020 and 2021. ing. $790 billion of corporate bonds mature in 2024 and $1.7 trillion mature in 2025. , and the majority of the outstanding debt was financed at interest rates significantly below current market rates.
Sabin Investment Partners, an investment firm founded in 2020 and based in Amsterdam, Netherlands, plans to launch a credit opportunity fund to tap into what is expected to be an increase in non-performing loan opportunities in the second quarter of 2024.
Savin founding partner and PM Bas Emmerig will introduce the fund at an upcoming event. webinar January 16th, Small Business Owner BIG ALPHA Episode 13 (Details below).
relative value strategy
The new fund implements a relative value strategy that focuses on the relationship between stocks, option volatility, and credit spreads by purchasing bonds and hedging default risk with long-term stock options that cover maturity.
The focus is on mid-market companies, typically in the United States. These companies tend to have greater pricing inefficiencies, lower liquidity, and greater profit potential due to a lack of analyst coverage. Due to size constraints, large distressed hedge funds often avoid these.
“The U.S. market has a very mature and predictable restructuring and bankruptcy framework that works very well for us as traders,” Erdem Yavuz, Partner and Head of Business Development, said in an interview with Oparesque. He spoke at “Obviously the number of opportunities is greater in the U.S. because of the market that exists.Furthermore, the companies we are looking at are more likely to have the derivative liquidity needed to hedge debt. Become.”
The new Credit Opportunities Fund is a chip from the Sabin Multi-Strategy Arbitrage Fund, the company’s flagship fund that does credit arbitrage, among other things. “Our duty as fiduciaries is not to over-allocate to any particular strategy in a multi-strategy fund, because then we would be gaining all sorts of other profiles that would not make sense in such a fund. Because you will be exposed,” Yavuz said. This is also a liquidity issue and does not necessarily match the monthly liquidity requirements of a multi-strategy fund.
“So we’re not doing anything new,” he added. “We’re not hiring new people because that’s what we’re already working on. We’ve also identified a pipeline of opportunities, and of course we have screeners. But the strategy that everyone knows is You need a way to allocate more time.” Your liquidity profile matches your investment profile. ”
Opportunities are likely to accelerate in the credit industry
The rationale for the investment is to take advantage of the mispricing of a company’s capital structure between debt and equity.
The company claims that opportunities are accelerating in the credit industry. “The financing cycle for companies is two to four years,” Yavuz explains. “And there’s a lot of media that corroborates this. There are a lot of companies that are now having to refinance their operations on very different terms. So 12 years of expansionary monetary policy and free money are over. Fundamentals Basically, there’s a tsunami happening. Refinances are coming and they’re going to hit our target companies. And if you’re paying 3% or 5% and it’s 10%. %, that’s a huge blow to your business. That’s why we expect a lot of companies will be funding. “Our profit pipeline or our opportunity pipeline.” “And we’re already seeing that. But next year’s window refinancing is going to be very significant.”
Distressed debt opportunities are discovered through a combination of fundamental research, quantitative analysis, and proprietary screening and valuation models for 1,500 companies.
Selected companies are worth saving because their restructuring is the ideal outcome of arbitrage. At these companies, Yavuz says, “the CFOs didn’t do their jobs properly, weren’t careful enough, and left the companies with too much debt.” “Bad companies can never be saved. But many companies are good companies that just have a lot of debt, and they need to be restructured.”
SICAV
The Savin Credit Opportunities Fund is a three-year closed-end Luxembourg SICAV managed by Privium Fund Management, a $4 billion AIFMD. The fund’s target annual return is 15% net. Two portfolio managers run it. Ian Summers, who started his career as the youngest ever trader at the Dutch Options Exchange, is the lead portfolio manager, continually identifying new inefficiencies in the market and managing the arbitrage trade run by Sabin. Exploiting inefficiencies within the world. Ricardo Westra is also the firm’s head of volatility trading.
The Eurekahedge Distressed Debt Hedge Fund Index returned 9.5% in 2023, compared to 2.8% a year ago. As of the end of November 2023, the trailing 12-month return for the HFRI ED: Distressed/Restructuring Index was 4%.
Related article:
September 22, 2022 Sabin MultiStrategy Arbitrage Fund Votes Winner of AIF Factor 2022
February 22, 2022 Oparesque Exclusive: Volatility-loving Dutch hedge fund returns 25% in first year
Upcoming webinars:
Small Manager – BIG ALPHA Episode 13
Episode 13 of this groundbreaking webinar series features a select panel of noteworthy small and/or emerging alternative investment managers.
In one hour, you’ll meet everyone, learn about the top quartile strategies, and ask questions as it’s an interactive session.
when: Tuesday, January 16, 2024, 11am ET (4pm GMT, 5pm CET, 6pm Riyadh, 7pm Dubai)
Who:
– Bas Emmerig, Founding Partner and PM, Savin Investment Partners
– John Brainard, Managing Director and Founder, Southview Timberland Investments
– Nico Cordeiro, CIO, Strix Leviathan
Register for free here: www.opalesque.com/webinar/
[ad_2]
Source link
