The Pearl Diver platform brings together credit skills in sub-investment grade corporate debt, quantitative cash-flow modelling skills, a robust analytics infrastructure, legal structuring skills as well as a deep understanding of underlying markets with long standing relationships with CLO managers, I-Banks and Broker Dealers that allow us to originate the best opportunities. We add value with more than two decades of experience in the key aspects of the CLO markets, in areas such as portfolio construction, risk management, structuring, rating, trading, product distribution and syndication.
For sophisticated institutional investors, the securitised debt markets continue to represent a significant opportunity to participate in credit, with targeted risk/return parameters. Leveraged Loans/LBO financings represent nearly $1 trillion in issued and outstanding floating rate corporate paper with loan securitisations or CLOs representing a $450 billion opportunity.
However, the asset class is complex and participants must be experienced, diligent, and discriminating. We believe only a few are currently equipped and poised to find and capture alpha across the global spectrum of securitised products. Whether the conditions are volatile or stable, our years of structuring and fundamental credit experience, and our focused risk-management skills enable us to be among those few.
Banks are retreating from LBO lending and being replaced by loan securitisation vehicles, such as CLOs. Investments in global, highly diversified, managed and levered portfolios of senior secured corporate loans in CLO format can be synergistic to Private Equity investments, with CLO equity funds capable of delivering 15-20% IRRs with 20%+ running annual cash returns, while CLO Mezzanine note focused funds capable of achieving floating rate returns of Libor + 7%-9% pa. Investments in the senior-most tranches of CLOs rated AAA and AA, yielding Libor + 1.5%+ can be a safe and higher yielding alternative to money market funds and corporate investment grade rated credit.