12th Mar 2015 17:03
LONDON (Alliance News) - Chenavari Capital Solutions Ltd Thursday said it has invested GBP14 million in a "thick first loss tranche" that gives it exposure to a revolving GBP1.9 billion portfolio of large corporate loans originated by a UK corporate and investment bank.
According to Chenavari, the bank in question is looking to reduce its risk weighted assets to help manage its capital position. Banks have come under increasing pressure from regulators to improve their financial strength, meaning that they have been cutting back on risk-weighted assets that consume high amounts of capital.
"The majority of the corporate borrowers in the portfolio are large UK companies, and over 60% of borrowers in the initial pool are either FTSE 100 or FTSE 250 listed entities. Each of the borrowers is rated at least BB+ according to the Bank's internal credit rating scale. The portfolio will revolve over a 5 year period, after which point there will be a bullet amortisation," Chenavari Capital Solutions said in a statement.
"The transaction will be funded by way of subscription by the company of instruments issued by the acquiring SPV (special purpose vehicle), which will in turn purchase the credit linked note," Chenavari Capital Solutions said.
On acquisition, the deal represents about 11% of Chenavari Capital Solutions' net asset value, the company said.
The deal means the company is now about 94% invested, based on its net asset value as at the end of January.
By Samuel Agini; [email protected]; @samuelagini
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