Large team of nine CLO investment specialists based in US and UK provides an information and sourcing edge with access to relative value opportunities across US and Europe.
Strategy Overview
Alcentra’s Structured Credit strategy focuses on investing in fundamentally undervalued “CLO” securities backed by senior secured loans to US and European companies. Alcentra’s Structured Credit platform spans the full breadth of the CLO capital structure across both US and European tranches.
Key Characteristics
Attractive total return potential
CLOs have the ability to provide high returns via leverage. CLO debt can generate robust cash flow from coupons and potential price increases, outperforming similarly related corporate credit.
Floating rate assets
The floating rate feature of CLOs offers a natural hedge in a rising rate environment gaining an additional yield pickup from rising base rates.
Embedded default protection
CLOs have embedded structural protections and 'self curing' features that can help ensure capital preservation during periods of market volatility.
Philosophy and Investment Process
The reach and depth of the Structured Credit team in the market and its counterparties put Alcentra in an advantageous position when sourcing and analysing opportunities. Portfolio construction is based on a rigorous investment process. Combined with an active trading approach where we see value – both selling and buying – we believe the firm’s extensive knowledge in this sector will lead to alpha creation over time.
Dynamic allocation across the capital structure at a platform level affords the team a differentiated understanding of market trends, relative value and increases negotiation power.
Fundamental credit focus with in-house expertise is applied systematically to entire universe of CLO tranches during the investment and monitoring process.
Relative value assessment embedded in investment process through proprietary systems comparing collateral, structure, documentation, manager and cash flow metrics.
Sustainability Commitment
Alcentra believes that responsibly managed companies are better placed to achieve a sustainable competitive advantage and provide strong long-term growth. As a result, our commitment to implement the six Principles for Responsible Investment (PRI) forms part of our standard investment process, which can be further reviewed in our Responsible Investment Policy.
The CLO tranches that the Alcentra Structured Credit strategy invests in, provide exposure to pools of loans managed by external CLO Managers. Due to the nature of these investments, the investment analysts' engagement regarding ESG considerations primarily sits with the CLO Managers, as is standard market practice; as opposed to the underlying investments. These engagements are focused on ESG exclusions; PRI signatory status & scores, ESG integration, disclosures, and other points.
Meet the Team
The Alcentra Structured Credit Strategy is led by Cathy Bevan and Brandon Chao who are supported by a dedicated investment team of structured credit professionals across New York and London. Each covers both US and European investments with strong industry experience and expertise across multiple market cycles.
The Structured Credit strategy benefits from a deep research bench across Alcentra’s broader platform of over 80 investment professionals.
Thomas Gahan is Chairman and Chief Investment Officer of Benefit Street Partners and is Head of Alternatives for Franklin Templeton.
Thomas Gahan
Chairman, Chief Investment Officer - Benefit Street Partners
Head of Alternatives - Franklin Templeton
Industry since: 1984
Cathy Bevan
Managing Director, Head of Structured Credit
Industry since: 2003
Brandon Chao
Managing Director
Industry since: 2005
