The what, how and why of an asset class that we believe presents more opportunity than many think.
Structured products are back in the limelight as the world continues to grapple with the fallout stemming from the COVID-19 outbreak. Many are citing collateralized loan obligations, or CLOs, as posing an outsized risk in the current market environment. We disagree.
In this note, we define structured products, their inherent nuances as investment vehicles, and how, when accessed correctly, they present a source of opportunity.
Steps to reopen the economy and progress toward a COVID-19 vaccine created an optimistic sentiment for much of the month, as HY Bonds, Senior Secured Loans and structured products posted strong returns. Interest rates remained relatively rangebound and the duration-sensitive Barclays Agg had a slight gain.
Private credit has grown in both size and breadth, prompting questions around the risks of the asset class and whether it could represent a bubble. We address those concerns in this note.
Private debt has grown from niche asset class to a heavyweight due to multiple structural shifts in capital markets—and its growth has shifted the opportunity set for both investors and borrowers.