3 Degrees Asset Management, an investment management firm based in Singapore, has launched the 3 Degrees Credit Opportunities Fund with assets of USD27.3m.
3DCO will invest in the performing debt obligations of Asian borrowers, focusing principally on senior secured bank loans, as well as receivables, private placements, high yield and convertible bonds.
3DCO does not intend to use leverage and aims to provide a high level of transparency to investors.
“3DCO will capitalise on the systemic inefficiencies endemic to Asian credit markets,” says Moe Ibrahim, founder of 3 Degrees and portfolio manager of 3DCO. “With over USD20trn of debt on the balance sheets of Asian commercial banks, the opportunity set is large and growing rapidly. Moreover, with only a handful of secondary market participants, there is no need to crowd into trades. We will cherry pick opportunities to ensure maximum return, adequate liquidity and downside protection to our investors.”
3 Degrees has been operating the strategy via its managed accounts platform since June 2009, returning an annualized 28 per cent net of fees.
3DCO will target companies that generate enough cash flow to repay maturing debt without dependence on additional fundraising exercises. 3DCO expects to limit volatility by keeping the fund’s average duration below 24 months, and targeting events such as puts and calls, in addition to working with companies to effect debt buy-backs and tenders. 3DCO seeks an annual net return in excess of 20 per cent.
3DCO has been established using a master/feeder structure, and is open to US investors, US tax-exempt investors, and non-US investors. The fund has a two-year lock up, and a 1.5 per cent/20 per cent fee structure. Deutsche Bank is the fund administrator and custodian and BDO is the auditor.
