Asset-backed finance is a method of diversifying non-public credit score portfolios and selecting up further returns, in response to Armen Panossian, co-chief government and head of performing credit score at Oaktree.
Talking within the agency’s newest Insights podcast, Panossian mentioned that personal credit score alternatives have developed over the previous 10 years, and the areas the place you will get “further return with out taking over significant further danger” are the place you go into “extra complicated lending alternative units”, reminiscent of asset-backed finance.
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He mentioned that the “complicated world” of asset-backed finance presents alternatives for traders by opening up entry to completely different industries.
“Asset-backed finance touches quite a lot of completely different industries, lots of which would not have debtors within the company direct lending market,” he mentioned.
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“It exposes or creates a possibility to spend money on these industries that in any other case may not be obtainable. For instance, delivery finance. You actually don’t see a delivery firm with a significant quantity of loans for instance, or bonds, high-yield bonds, that you could possibly purchase available in the market in a various method.
“However within the asset-backed space, you could possibly select to lend in opposition to a specific sort of ship- ping vessel, a specific set of counter-parties or lessees of delivery vessels. It’s a method so as to add diversification to a non-public credit score portfolio by including asset-backed finance and selecting up further return.”
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