Credit investors scour the world for niche opportunities
SAN FRANCISCO — The hunt for yield in the credit markets has led large investors to companies in Indonesia, financing the Brazilian soybean trade and even loans to a business that tries to profit from European soccer stars’ social media feeds, several of them said at an event in San Francisco this week.
“You have to scour the globe for investment opportunities,” Brad Bauer, president of $13-billion alternative investment firm Värde Partners Inc., said on the sidelines of the IMN Total Alts conference. “The easy opportunities of five years ago are not as prevalent.”
Värde favors far-flung bets such as real estate in Italy and Spain and direct lending in India over more traditional credit investments in the United States and other developed countries.
It has become so hard to find safe investments that deliver decent returns that investors have little choice, said Bruce Richards of $14-billion hedge fund manager Marathon Asset Management.
“Fixed income is incredibly rich across the world,” Mr. Richards told attendees in a speech on Thursday.
Marathon is also investing in disparate credit strategies, including aircraft leasing and non-performing loans bought from European banks, he said.
Kathleen Townsend, a managing director at $12-billion investment and advisory firm The Rock Creek Group, cited a high-interest loan from a direct lending fund to a small mushroom farm in Pennsylvania that was passed over by banks as an illustration of strong performance by niche investments. “Private credit… has been a very good area for our clients.”
During the event on Thursday and Friday, panel guests spoke about investments in everything from water infrastructure to shipping container leasing.
Amit Thanki, an investment officer at San Bernardino County Employees’ Retirement Association, said that the pension had indirect debt exposure to a London-based business that sells product placements on social media feeds of top soccer players.
Some speakers did cite more conventional credit bets, such as corporate bonds, but said these options required a nimble approach.
Chris Huggins, head of $31-billion Man GLG’s multi-strategy credit business, said on a panel that his team is pursuing European investment grade bonds poised for a dramatic price drop because of a ratings downgrade, such as in retail.
“It throws up some interesting asymmetrical opportunities to the short side,” Mr. Huggins said. — Reuters
