HSBC AM has launched a first fund providing access to revolving credit facilities

(Boursier.com) — HSBC Asset Management (HSBC AM) has launched a first fund providing access to revolving credit facilities (or RCF, for Revolving Credit Facilities) in partnership with the banking entities of the HSBC group, intended for professional clients only including institutions and businesses.

This strategy involves investment in a diversified portfolio of revolving credit facilities (RCFs) issued by HSBC to European companies owned by private equity funds. It will particularly target the senior tranche of the capital structure, favoring quality leveraged loans, backed by first-rate sponsors.

RCFs are variable rate, senior or super senior credit facilities, primarily dedicated to working capital and general business needs.

According to Borja Azpilicueta, Head of the Capital Solutions team at HSBC Asset Management: “Revolving credit facilities offer diversification from traditional private debt strategies. They provide access to an underutilized segment of the market, thereby contributing to support the real economy. RCFs can generate attractive returns while benefiting from a higher liquidity premium and lower default rates than other traditional credit strategies.
We are delighted to be able to offer investors an effective solution to access this opportunity, providing a solution that combines our investment expertise and HSBC’s origination capabilities in Europe.”

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Origination capabilities

Under the partnership agreement with HSBC, the strategy will be managed by HSBC AM’s Capital Solutions team, while leveraging HSBC’s origination capabilities in Europe. HSBC AM will thus provide an additional and independent level of selection, which will add to HSBC’s already careful underwriting process.

The Capital Solutions team is part of HSBC AM’s Alternative Solutions division and was established in 2022 to provide institutional clients with access to HSBC’s proprietary private assets trade feeds.

The launch of the RCF strategy is part of HSBC AM’s strategy to develop its capabilities in alternative solutions, which span private markets, private credit, hedge funds, real assets, venture capital and solutions flexible capital. With a team of 260 people dedicated to alternative assets, including more than 100 management professionals, HSBC AM’s Alternative Solutions division had assets under management and advice of $67 billion* as of September 30, 2023.