BNP Paribas Asset Management (BNPP AM) has announced the launch of the BNP Paribas Flexi III European Senior Corporate Loans fund, part of the Luxembourg-domiciled BNP Paribas Flexi III Sicav.
It invests in senior secured corporate loans, issued by primarily European borrowers with a BB- or B+ rating.
The strategy is run by the 18-strong BNPP AM’s global loans team, headed by Vanessa Ritter and based in New York and Paris.
The team, which manages over €5bn, expanded in recent times with the arrival of two new credit analysts based in Paris. Thomas Bruneel (pictured left) focuses on the automotive, building materials and gaming & leisure sectors.
He re-joined from Moody’s Investor Services, having previously served within BNPP AM’s global loans team.
Tanguy Godefroy (pictured left) focuses on the chemicals sector. He joined from BNP Paribas’ corporate debt platform, where he was responsible for the origination, structuring, underwriting and execution of LBOs, leveraged corporate acquisitions and refinancings across EMEA.
Javier Peres Diaz, head of European Loans at BNP Paribas Asset Management, commented: “Default rate expectations for the near term remain low, therefore the embedded cost of risk of the loan market should stay quite limited. In light of this, senior secured loans are set to continue offering compelling risk-adjusted returns on both an absolute and a value-relative basis, despite the spread compression witnessed so far this year, which is reflective of the current supply/demand imbalance.
“Strong credit support factors, both macroeconomic and technical, should translate into low default rates in the near future. Moreover, average interest coverage metrics suggest that issuers still have significant flexibility to meet financial obligations, and refinancing needs are rather limited in the next few years.
“Structural shifts in the way companies obtain longer-term financing, combined with improved secondary market liquidity and attractive returns have resulted in growing institutional demand for loans. They offer stable cash income generation and portfolio diversification, together with favourable treatment under Solvency II, all of which are supporting continued allocations by investors.”