Structured Securities

 

Babson Capital manages a number of CDO Funds in which the underlying assets are themselves CDOs. We also have several separate account mandates where clients have hired Babson Capital to manage portfolios of CDOs. We can structure Funds where we invest in equity tranches, debt tranches or both.

Credit Intensive Focus

  • In-depth knowledge of the major asset classes included as underlying assets in CDO transactions, such as high yield bonds, emerging markets fixed income, syndicated loans, and investment grade bonds

Analytical Ability

  • Extensive analytical expertise with respect to CDO securities
  • Dedicated systems, such as the proprietary CDO WorldSM, to analyze and evaluate CDO structures
  • Resources dedicated to monitor CDO securities, including the underlying asset credit and concentration risks

Knowledge Of Structures

  • In-depth knowledge of CDO structures gained from experience acting as portfolio manager for more than 30 distinct CDOs
  • Client accounts currently own over 200 different tranches in non-affiliated CDOs across more than 110 different issuers and over 50 different collateral managers

Access to Markets

  • Babson Capital has wide experience in the primary and secondary markets accumulating CDO securities for portfolios, which it manages, and a range of dealer contacts with whom to buy and sell securities

Investment Philosophy - CDO Securities

  • When investing in CDO securities, we:

  • Invest in CDO securities based on a bottom-up analysis of the collateral manager (people), the soundness of the capital structure (cash flow waterfall) and the value of the security (relative value), based on our assessment of the risks the manager has taken in the underlying collateral pool
  • Diversify our portfolio by Collateral Manager, Issuance Cohort, Capital Structure Seniority, Asset Class and Management Style
  • Use our extensive knowledge of the underlying assets to judge the risk tolerance, style and competence of the collateral managers
  • Actively monitor the aggregate underlying risks contained in our portfolio and seek to maximize overall industry and issuer diversification
  • Capture and analyze CDO portfolio and market information, using our proprietary CDO WorldSM Monitoring System, and leverage this information to make pro-active investment decisions
  • Limit ourselves to CDOs with underlying asset classes where we have independent knowledge and expertise
  • Use our extensive knowledge of CDO structures to judge the risk/reward tradeoff in each tranche issued

Product Strategy Style
Connecticut Valley CLO Funding IV Ltd. Alternative Structured Funds
Connecticut Valley Structured Credit CDO I, Ltd. Alternative Structured Funds
Connecticut Valley Structured Credit CDO II, Ltd. Alternative Structured Funds
Connecticut Valley Structured Credit CDO III Ltd. Alternative Structured Funds
Pioneer Valley Structured Credit CDO I Ltd. Alternative Structured Funds