Market updates and sector developments

Stifel Financial Corp and Lord Abbett have formed a substantial leveraged lending joint venture, which compliments the existing capabilities of both firms. Called SBLA Private Credit, the JV will focus on both new issue and existing loans to small and mid-sized portfolio companies of financial sponsors.

SBLA Private Credit brings together two of the industry’s most established brands, with in-depth coverage across the middle market and reputations for strategic growth and disciplined risk management. Combining the strength of Stifel’s full-service platform and direct lending capabilities with Lord Abbett’s leveraged credit presence and capital base, the JV is uniquely positioned for success in today’s origination market, according to the two firms.

SBLA Private Credit will be equally managed by senior representatives from Stifel Bank and Lord Abbett. As a demonstration of both firms’ strong and aligned credit cultures, they have already co-invested across multiple loans.

In other news…

Residual sale accounting error identified
LendInvest has identified what it describes as “an isolated issue” with the accounting advice concerning the sale of its non-risk retention residual economic interest in the Mortimer BTL 2023-1 RMBS (SCI ABS Markets Daily - 22 November 2023). The error will result in downward adjustments to its previously expected NOI and profit before tax for full-year 2024.

On 5 January, LendInvest announced that the sale of the residual interest for a net consideration of £5m would generate a net gain of approximately £12.1m before tax. However, the firm has now disclosed that there is an issue relating to swap and hedge accounting assumptions that include mark-to-market adjustments and fair value hedge accounting applied as part of the derecognition calculation. On the basis of its revised derecognition calculation in respect of the sale, the firm advises the market to disregard the previously expected net gain.

The adjustments have no impact on LendInvest's current cash position and guidance for full-year 2025 remains unchanged with respect to its expectation of returning to profitability during the financial year. Full-year results for the 12 months ending 31 March 2024 and an update on the firm’s strategy will be announced in July.

Corinne Smith