Stockholm (HedgeNordic) – A recovering economy, the prospect of inflation and rising rates are making floating-rate debt such as corporate loans and collateralized loan obligations (CLOs) – pools of corporate loans packaged into securities – increasingly attractive to many investors. With the migration of U.S. CLO managers to Europe more common, Copenhagen-based sub-investment credit manager Capital Four Management has broken the trend to grow its presence in the U.S. CLO market.
Earlier this year, Capital Four appointed Jim Wiant as Partner and the CEO of Capital Four’s U.S. arm to establish and lead the firm’s U.S. efforts. He joined from MidOcean Partners, where he built a well-scaled credit business for the past 12 years as a senior member of MidOcean Credit Partners. He was overseeing MidOcean’s collateralized loan obligation (CLO) business and served as a portfolio manager for certain customized opportunistic credit strategies. Several months after appointing Jim Wiant to establish and lead its US efforts, Capital Four made three new hires to add resources to its U.S. investment team and operation functions.
US Capital Four plans to open a CLO warehouse towards the end of the summer and then price its first U.S. CLO, Wiant tells GlobalCapital. Capital Four’s expansion efforts may encourage other European CLO managers to tap into the U.S. market. “It has been more the reverse as a trend, with US managers moving to Europe,” Wiant tells GlobalCapital. “But [Capital Four’s move to the US] is not without precedent. Firms, such as ICG, CVC, and AXA Investment Managers have roots in Europe but they have been in the US for a long time and were able to build very large platforms. I believe that the transition suits well established managers in Europe,” he adds.
“The US loan market is attractive from a relative value perspective and [because of]the increasing demand for floating rate notes.”
“The US loan market is attractive from a relative value perspective and [because of]the increasing demand for floating rate notes,” Jim Wiant tells GlobalCapital. “The favorable market conditions marry well with Capital Four that has a track record of performance and never had a loan defaulted since it entered the space in 2013,” he continues. “The good performance of the CLO market during Covid-19 has been an important attribute from an investor perspective,” Wiant tells GlobalCapital. “The market has showed to be remarkably resilient and the CLO structure held up very well. From a business perspective, it is a very attractive building block as well, strategically important to Capital Four both in terms of EU and US issuances.”
