Broadly syndicated loans to non-investment grade U.S. Corporations (“leveraged loans”) are widely misunderstood. A number of commentators imply that leveraged loans are shadowy corporate equivalents to pre-crisis sub-prime mortgages. We do not believe this to be true and in this paper we:
• Define Broadly Syndicated Leveraged Loans as loans to U.S. companies that are rated non-investment grade, or below BBB-/Baa3 by the rating agencies. These loans are typically divided into a Revolver and an Institutional Term Loan, which is typically individually rated, and is priced and traded in the secondary market. These loans stand in contrast to direct loans, which typically are originated by one or a handful of non-bank lenders and are not typically priced, rated or traded.
• Explain the characteristics of the Institutional Investor base, which includes CLOs (51%), Loan Mutual Funds (11%) and Other Investors (38%).
Volta Finance Ltd (LON:VTA) is a closed-ended limited liability company registered in Guernsey. Volta’s investment objectives are to seek to preserve capital across the credit cycle and to provide a stable stream of income to its Shareholders through dividends that it expects to distribute on a quarterly basis.