Credit advisory and investment specialist Venn Partners has launched Venn Risk Analytics (VeRA), its proprietary financial analysis platform for structured finance products.
VeRA has been rolled-out over the past six months with a number of financial institutions to advise on some GBP2bn of asset-backed securities (ABS). The platform is now being presented to a broad range of potential clients, including portfolio and risk managers across a variety of institutions such as banks, insurers, institutional investors and alternative funds.
In summary VeRA allows clients to:
• Demonstrate a high level of governance for risk management and reporting
• Establish a clear, transparent framework for regulatory and economic capital allocation
• Respond to requests from internal and external stakeholders
• Run consistent stress simulations across whole portfolios
• Identify investment opportunities and evaluate restructuring situations
• Value complex and illiquid credit products
• Compare fundamental valuations with market prices
The twin fundamental market drivers for the development of VeRA are the requirement of many financial institutions to better manage the billions of structured finance products they hold in their portfolios and the need to secure more sophisticated analysis of the new issuances emerging in many ABS markets, such as RMBS, CMBS and CDOs.
VeRA’s comparative analysis provides a consistent approach to comparing bond fundamentals and risk adjusted returns. It simulates an array of potential bond performances around the forecast base case and the associated probability distribution of these outcomes. This approach demonstrates both the fundamental value of a bond portfolio and the relative risks associated in holding the bonds. It provides a clear fundamental price expectation based on a range of possible outcomes, the VeRA price, which clients can compare to market valuations to help inform how they should manage their portfolios.
Richard Green, director at Venn Partners, says: “We are very pleased with how successful VeRA has been in helping the institutions that have been using the platform manage their structured finance portfolios in our initial roll-out and we are delighted to now make VeRA available more broadly. A whole range of financial institutions, banks, insurance companies, alternative funds have a need to manage better the risks in their ABS portfolios and seek opportunities to enhance their returns on these securities and VeRA offers probably the most independent, transparent and consistent approach to the analysis and valuation of structured finance products in the market.”