Amundi, the European leader in bond management with more than €800 billion in assets under management(1), is enhancing its existing offering of alternative credit with the launch of a European leveraged loan fund intended for institutional investors. A sub-fund of a SICAV governed by Luxembourg law, Amundi Leveraged Loans Europe 2018 invests mainly in the universe of senior secured leveraged loans, issued for the financing of leveraged buy-outs (LBOs) or large-scale acquisitions.
European leveraged loan new issue volumes have exceeded that of European High Yield bond new issue volumes in both 2016 and 2017(2). European leveraged loans represents a large market, both in terms of the number of issuers and its absolute market size and represents an attractive asset class for investors in the current context of a potential rise in interest rates. European leveraged loans are floating rate loans generating a margin over Euribor (or Libor) andtypically benefit from a Euribor floor of zero.
“We invest in both the primary and secondary markets with the aim of taking advantage of market opportunities, and we also seek diversification across both sectors and geographic regions in the portfolio. The objective of this active, diversified management is to generate regular returns with low volatility,” explains Thierry de Vergnes, Head of acquisition debt funds at Amundi.
The issuers selected are mostly European companies that are owned by major private equity players. In the current market conditions, active management of the portfolio of selected leveraged loans aims to deliver a return of around 4% above Euribor until the fund’s maturity (6 to 8 years), while providing monthly liquidity.
Although this strategy carries credit risk(3), institutional investors increasingly include an allocation to this asset class as part of their global investment strategy in the fixed income markets. Private debt, and leveraged loans in particular, has a returns profile that a growing number of institutional investors see as attractive, with the added benefit of low correlation to more traditional fixed income assets3.
Amundi’s private debt and leveraged loans teams manage €5 billion and €3 billion respectively , benefiting from using the Group’s Fixed Income platform. This platform is composed of 150 professional bond and loan specialists(1) in Amundi’s large investment centres in Europe (London, Paris and Milan) and the United States (Boston).
The fund, which is marketed in France, Italy, Spain, Germany, Austria, the United Kingdom, the Netherlands, Luxembourg, Belgium, Denmark, Norway, Sweden and Finland, is targeting €300 million in assets under management.
(1) Source: Amundi figures as at 31 December 2017.
(2) Source: LCD S&P Global View
(3) Credit risk: loans are based on the issuer’s ability to fulfil its payment obligation, which cannot be guaranteed. This risk of default is all the greater when the issuer's financial flexibility is low. Please refer to the risks section of the fund’s prospectus for more information.
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Amundi, the leading European asset manager, ranking among the top 10 global players, offers its 100 million clients - retail, institutional and corporate - a complete range of savings and investment solutions in active and passive management, in traditional or real assets. This offering is enhanced with IT tools and services to cover the entire savings value chain. A subsidiary of the Crédit Agricole group and listed on the stock exchange, Amundi currently manages more than €1.9 trillion of assets.
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