Episode 5 | We see a broad range of companies that come to us asking for financing and we see a lot of participants who provide financing to the market that talk up the value of having loans that are seen as senior secured but that’s dangerous because in making a statement about senior secured, you create a sense of security, of safety, and that’s not necessarily the case. Let me give you an example…
Episode 4 | The way that Epsilon assess credit risk is actually as a corporate cash flow lending specialist and each loan that we assess we do it in a bespoke way. First and foremost, we look at the business and industry risk alone that the loan and borrowers are exposed to and we also look at the historical financials and undertake financial forecasting to really get our heads around how the loan might perform under a range of different financial outcomes and macro economic outcomes…
Episode 3 | Epsilon targets performing credit opportunities. Specifically, that means we like to lend to mid-market corporates who have a track record of earnings and can demonstrate it and have a strong and defensive position in their chosen sector. We predominately target senior secured lending and we like to be controlled lenders. We like to deal with our borrowers on a bilateral basis. Some of the sectors that sit in our portfolio currently include healthcare, education, telecommunications, food staple manufacturing. So this gives you a flavour for the opportunities that we target. They definitely sit at the defensive end of the credit spectrum.
Episode 2 | Offshore is certainly more mature and private credit has been in existence a lot longer, for example in the US, which is where private credit lending really started and that can bring good things, but it can also bring bad things as well. What I do know, is that right now in the US for example, enterprise values are at record highs, there has been a lot of money pumped into the system, there is a lot of capital trying to find a home. In addition to that, leverage levels are at an all time high. Structuring features within the US loan markets are at all time lows in my opinion…
Episode 1 | Corporate borrowers are attracted to Epsilon for a couple of key reasons. One of the key reasons is service. This is at the structuring of the loan solution but also through the life of the loan. Borrowers generally trust us because they know us. They’ve been working with us for a long time over many years. They are repeat customers and come back to do business with Epsilon. The other reason corporate borrowers are keen to work with us is flexibility around the loan structuring solution. So the two key reasons borrowers are keen to work with Epsilon are service and flexibility.
Are banks really retreating? Much has been written on the growth of the private credit asset class in Australia and for all the nuances between credit strategies there is one consistent message: that the market opportunity exists in large part because the banks are retreating from this traditional line of business, driven in turn by increasing regulatory pressures from the regulator.
