CreditFlux: Babson Capital #1* manager of Corporate Cash CDOs
05/29/2007 -- Babson Capital is the market's #1* manager of corporate cash CDOs, according to the April issue of CreditFlux.
"In the CDO business - there is a plausible argument that bigger ought to be better," the magazine stated in its featured article entitled "The market where size matters." "If that is the case then it is crucial to know who are the biggest CDO managers," the magazine wrote.
U.K.-based CreditFlux (www.creditflux.com) used a proprietary methodology to develop a series of rankings in what it says will be a regular review of CDO managers. The April issue was based on all deals outstanding as of March 23, and Babson Capital was credited by the magazine with having $15.855 billion under management in corporate cash CDOs, earning it the top spot.
Among market-value CDOs, the firm's 6th position was earned through CreditFlux's attributing $1.657 billion of assets under management. The article also notes the series of Enhanced Mortgage-Backed Securities (EMBS) funds as an example of market-value CDOs.
As of March 31, 2007, Babson Capital reported a total of just over $22 billion in assets under management in 50 CDOs of various types.
The article noted that Babson Capital is represented in the market by a U.S. Bank Loan Team, based in Charlotte, N.C., headed by Tom Finke, and a European-based business as well - Babson Capital Management Europe Limited, headed by Ian Hazelton.
The article included comments from Finke, who noted that, while size is important, experience and a long-term focus are also very valuable.
"Being a large buyer helps to get good allocations to the right loan deals," Finke said. "But what is even more important is that the originators know we are long-term players in this market."
Finke was quoted later regarding the firm's focus on credit fundamentals.
"There are always asset-specific factors you have to take into account such as looser structures and higher leverage," Finke said. "But at the end of the day this is a credit business. Long-term success comes down to good analysis and proper due diligence on the borrowers."
In conclusion, the article noted the growth of the CDO market has made CDOs a central business area for some firms.
"We view CLO structured and the CLO market as fundamental to what we do," Finke said. "We manage various types of vehicles and accounts, be we like CDOs as a vehicle for managing loan assets in today's market."
* Ranked #1 of Leading Managers of Corporate Cash CDOs by outstanding $m.
About Babson Capital Management LLC
Babson Capital Management LLC and its subsidiaries serve institutional investors around the globe and have $128.9 billion in assets under management as of June 30, 2010. Through proprietary research and analysis and a focus on investment fundamentals, we develop products and strategies that leverage our broad array of expertise in fixed income, equities, alternative, structured products, debt financing for corporations and debt and equity financing for commercial real estate. Based in Boston and Springfield, Mass., and Charlotte, N.C., with offices in New York City and Los Angeles, the firm’s subsidiaries include Babson Capital Europe Limited in London, Babson Capital Australia Pty Ltd in Sydney, and Cornerstone Real Estate Advisers LLC in Hartford, Conn. Babson Capital is a member of the MassMutual Financial Group.