S&P has reacted to the expected growth of such alternative investments by developing criteria for rating debt secured by the market value of hedge funds. The US agency expects that rating these CDOs will encourage a wider investor base for the deals which, to date, have been dominated by niche investors.
“For the first time, typical bondholders can participate in private equity funds and hedge funds by investing in these rated leveraged structures,” said Nelson.
Standard & Poor’s is presently reviewing five transactions securitising investments in hedge funds.
The week on Risk.net, July 7-13, 2018Receive this by email