Babson Capital Europe invests in primary issues of European loans and debt securities traded in secondary markets. Investments in European loans are sourced:
- from arranging banks for both debt and European leveraged buyouts;
- in the senior secured loan syndications market;
- from the mezzanine loan syndication market;
- in the high yield bond primary placements and secondary market;
- from secondary trading desks of the investment banks.
Babson Capital Europe's investment strategy focuses on European loans. Assets are selected on the basis of:
- principal preservation;
- sound market leading core businesses, with limited performance volatility, and predictable and well-established internal cash flow;
- investing in businesses with a predictable, high quality of earnings where a going-concern sale is likely to be attractive even during a market downturn;
- experienced management teams and transaction sponsors;
- investing in the most attractive risk-adjusted security in a capital structure;
- using industrial and financial contacts to originate, analyse and monitor investments;
- trading with the counterparty that offers the most attractive price in the market;
- avoiding lending to excessively leveraged companies;
- active portfolio management to enhance returns and re-balance exposures where appropriate;
- continuously evaluating the quality and relative value of portfolio assets; and
- active post-deal credit management supported by monthly management information.
European loan investors are typically provided with monthly management information and confidential management plans and forecasts, which allows us to continuously monitor credit quality. This information effectively gives early warning of difficulties and has proved vital in safeguarding the credit quality of our assets.
Our investment strategy is credit driven with the emphasis on selectivity and diversity - by industry, issuer and geography.