Babson Capital Management and Babson Capital Europe have raised in excess of USD1.2bn for the Dublin-domiciled Babson Capital Global Loan Fund in the last 18 months.
This takes the AUM of the open-ended high yield credit funds managed by Babson Capital, which launched in 2009 with the Babson Capital European Loan fund, to over USD3bn. This suite of funds offers investors ready access to global, European or US strategies in senior secured loans, senior secured bonds and high yield bonds. Babson Capital’s total AUM in global high yield investments is approximately USD27bn.
The Global Loan Fund, which takes advantage of Babson Capital’s large, integrated high yield market presence in both European and US markets, seeks to maximise risk adjusted returns to investors through exploiting relative value across different geographies. Recent fund flows have been particularly strong from pension and insurance investors in the UK, Northern Europe and Australia who can access such strategies in local currency.
The apparent market opportunity in Global Loans is significant because:
• Loan spreads in the US and Europe are attractive and are expected to remain elevated due to market technicals;
• Primary and secondary markets both offer attractive pricing;
• Corporate fundamentals remain strong;
• The secured, defensive nature of senior secured loans offer a highly compelling risk/return profile to investors;
• The floating rate nature of loans can also provide a hedge against interest rate sensitivity;
• Ability to exploit relative value in different geographies.
Zak Summerscale (pictured), chief investment officer of European high yield at Babson Capital, says: “Raising over USD1.2bn in a relatively short time period from a blue-chip global investor base is testament to the strength and expertise of our senior secured loan and bond capabilities and the opportunities inherent in a ‘global’ approach. Our global senior secured loan and bond strategies are an important element of our wider product offering to provide investors with access to a range of strategies in the increasingly complex sub-investment grade credit markets.”