Sector developments and company hires

Direct lending platform unveiled
Oaktree Capital Management has launched private credit-focused Oaktree Lending Partners (OLP) and its related vehicles. OLP is targeting US$10bn in equity commitments from institutional investors and will seek to originate senior secured loans of US$500m or more to private equity-owned US companies, typically with over US$100m in EBITDA.

Oaktree believes this market is especially attractive now, given the limited availability of debt capital to finance large LBOs and the record-high levels of committed private equity capital yet to be deployed that requires financing. In Oaktree’s view, this imbalance has been driven by the retreat of banks from this form of lending and the constrained capacity of non-bank lenders that are fully invested or managing issues with prior investments.

Yields on large LBO loans have increased significantly in the last year, averaging 12.4% at year-end. This is primarily due to the dramatic spike in base rates during 2022 and the shortage of funding for large LBOs.

The companies that are the subject of these transactions often have critical mass and established track records, positioning them well to weather economic cycles. Oaktree therefore believes the risk-adjusted return potential available in this segment of the market is currently very compelling.

In other news…

North America
Octaura has recruited Howard Cohen as head of leveraged loan execution, following the successful completion of its first entirely syndicated loan trade earlier this month (SCI 2 February). As the latest addition to Octaura’s growing executive team, Cohen will be responsible for leading the platform’s ongoing growth and integration strategies. He joins the firm from MarketAxess, where he had operated as head of leveraged loans since 2020, and brings more than 25 years of sales and leadership experience across different fixed income markets.

Portfolio optimisation tool offered
US Bank is expanding its offering to CLO clients with the addition of portfolio optimisation capabilities to its Pivot client platform. Pivot Portfolio Optimisation will offer users a comprehensive view of their accounts, allowing them to evaluate and identify trades that meet their unique portfolio needs.

The new tool will allow CLO portfolio managers to integrate their own research and facilitate faster and more effective trading. The offering is able to sort through tens of thousands of potential portfolio combinations to source the best combination of investments to serve a client’s objectives, which will typically aim to maximise the weighted average spread of a CLO. Designed with investment action in mind, clients will also be able to include custom constraints calculated on their own internal data, such as the use of their own credit scoring system.