The importance of including syndicated loans in portfolios was highlighted at this year’s Fixed Income Leaders Summit (FILS) Europe.
The syndicated loan market is growing rapidly, reported Thierry de Vergnes, managing director of bank loans funds and acquisition debt funds at Amundi, championing the product as an outperforming market.
“There is a good interest from an issuer perspective to go into this pretty flexible market, and managers can actively manage the asset class,” he explained.
With more large companies getting involved in the space, strong yields and the benefit of not taking interest rate risk on board, syndicated loans are increasingly popular. It is no secret that private credit is becoming an increasingly important presence in the industry.
“This segment, which has been around for a while, is a significantly evolving part of the market,” de Vergnes added. “It’s a market that should be open to retail investors. It’s unbelievable that people can buy stocks, bonds, but not buy bank loans.”
He anticipates ELTIF to serve as the “long awaited bridge” between the retail market and these asset classes, acknowledging that it will take a long time to catch up to US levels of retail engagement but that this is a significant step.
Taking a long-term view, sell-side firms should be able to support both issuance and trading, said Moreno Tatangelo, senior portfolio manager at Kairos.
“Banks are fundamentally well-positioned today; much stronger than they have been for the past 15 years,”
Although spreads are not quite as wide as they were post-Credit Suisse collapse last year, the space is still interesting, he added.
“Spreads for these instruments are still quite generous.” he said. “[There are] interesting and growing opportunities in the credit hedge fund space, which are currently seeing high dispersion and tight spreads that he expects will widen in coming years.”
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