Hybrid Structured Credit Funds: Securitisation moves into new paradigm

The restarting of private-label securitisation markets, especially in the US is critical to limit the real sector fallout from the credit crisis. At the same time fund managers are facing increased regulatory obligations, a rapid growth of complex assets and structures all with pricing and servicing demands.

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Introduction to hybrid structured credit funds
The restarting of private-label securitisation markets, especially in the
US, is critical to limiting the real sector fallout from the credit crisis.

Making sense of structures and acronyms
ABS, CDO and CDO2 are all part of the language of the heyday of securitisation. This is a guide through some of the terms used then and which are still prevalent in today’s market and in hybrid credit fund structures.

Credit-rating agencies
Rising delinquencies in the US subprime mortgage sector triggered a flood of downgrades by credit-rating agencies.

Servicing, pricing and technology
Fund managers are facing increased regulatory obligations, a rapid growth of complex assets and structures, as well as greater investor demands for transparency and liquidity.

Fund administration for hybrid structured credit funds
As the hedge fund industry has continued to change and evolve, administration of the funds has also had to change.

Investor interest rises
Discounted corporate debt has presented good investment opportunities for fund managers and investors. How the market for structured products, including securitised loans, will develop in the future is, however, an open question.

Legal structures are innovative and tax-friendly
Three jurisdictions have emerged as leaders in offering credible,
tax-efficient vehicles in which to place hybrid structured credit funds.

Fund profiles: four funds that have made the transition
Profiles of Luminous Capital, AXA, Swiss Capital and Alcentra.

Future developments show potential of the market
Predicting the future is a thankless pursuit at the best of times. In a post-financial crisis world, trying to second-guess market movements and innovation is even more difficult.