STRUCTURED CREDIT HERO

GIB Structured Credit Strategy

Structured credit consists of bonds created via the securitisation of assets or the repackaging of securities generating cash flows.

These products, comprising mainly of asset-backed securities (ABS) and collateralised debt obligations (CDOs), give investors’ portfolios exposure to a range of underlying assets and key economic sectors.

Structured credit’s low correlation with more traditional fixed income products provides the potential for diversifying the sources of returns in a portfolio. It can also generate attractive risk-adjusted returns.

Characteristics

1

Secured investment backed by a wide range of sectors

2

Several ABS asset classes and CDOs, especially collateralised loan obligations (CLOs), have demonstrated resilience during severe crises as a result of structural enhancements

3

Offers higher coupons for a given credit rating due to complexity and illiquidity premiums, as well as regulatory requirements

4

More tailored risk/reward profile within the selection of seniority, thereby offering flexibility in positioning

Approach

We create bespoke structured credit portfolios to fit within our clients’ broader credit portfolio. The portfolios can cover a range of underlying economic sectors such as consumer credit, real estate mortgages and corporate leveraged loans. We will build each client’s portfolio to target alternative sources of returns suited to their needs, with reduced correlation to traditional credit markets.

Analysis

Our clients benefit from our deep credit expertise, underpinned by two decades of structured credit portfolio management. We screen the market to capture trends and relative value opportunities and assess liquidity and volatility. Our ability to anticipate market shifts informs our decisions on how to position each client’s portfolio, centred around their objectives.

Implementation

To implement the macro-economic positioning of clients’ portfolios, we scrutinise and select individual credit positions through a systematic review of the capital structure, transaction terms, collateral characteristics, the collateral manager's experience and third party attributes. This deep analysis, combined with thorough market screening, enables us to build robust portfolios. Prior to its inclusion in a portfolio, we model and stress test every deal to provide cash-flow analytics for risk management and valuation purposes.

Monitoring

We conduct ongoing credit surveillance to ensure every investment performs as expected and that each portfolio remains within clients’ individual risk parameters.

Structured credit investors can benefit from its potential for diversification and compelling risk-adjusted returns

To discuss how this strategy can fit within your overall portfolio, please contact our solutions team

T: +44 (0) 20 7259 3149
E: solutions@gibam.com