Structured Credit

OFS Capital Management’s Structured Credit business targets investments in CLO equity and debt and CMBS.

Our expertise and capabilities investing in leveraged loans and middle market loans give us a competitive advantage in identifying and investing in CLO equity and debt securities and CMBS.

Our Approach

We focus on generating stable distributions by investing in a portfolio of CLO equity and debt securities and CMBS that are varied by opportunity, capital structure, vintage and manager.

We also partner with CLO managers and CMBS issuers to secure positions, including CLO equity and loan accumulation facilities, which seek to provide investors with the best risk-adjusted returns.

INDUSTRY EXPERTISE:
  • Bottom-up credit focus & security selection
  • Deal & structure analysis
  • Collateral asset review
  • Risk assessment & review
    • Track record
    • Investment style
  • Management team review
  • Competitive environment
  • Relative value, including macro/micro trends

Investment Strategy and Guidelines

U.S. CLOs backed by senior secured performing loans

We primarily invest in equity and debt securities of CLO vehicles that are backed by senior secured performing loans. CLOs are securitization vehicles backed by assets mostly consisting of first lien, senior secured rated loans of large U.S. corporations. Relative to other yield-oriented credit investments, CLO equity has the potential to generate attractive risk-adjusted returns. We utilize a methodical and rigorous investment analysis and due diligence process to proactively source and identify investment opportunities. Our investments are diversified through a number of positions across vintages and managers and are evaluated by assessing the risk in underlying portfolio credits.

Non-agency U.S. CMBS backed by first mortgage loans

Our expertise lies in CMBS, primarily backed by first mortgage loans. We invest in securities up and down the capital structure, as well as B-notes, Mezzanine Loans and Preferred Debt, all backed by commercial real estate assets. We emphasize fundamental analysis, focusing on the credit characteristics of the investments in order to evaluate the best risk-adjusted returns for our clients. The team benefits from our partnership with CIM Group, providing “boots on the ground,” real-time market trends in pricing, leasing and development across the U.S. Our proficiency spans multiple market cycles and various commercial real estate disciplines, including securitization, underwriting, origination, trading, structuring and surveillance.

Transaction Types
  • SASB
  • Conduit
  • CRE CLO
  • Re-REMICs
  • Agency CMBS
  • REIT Debt

Structured Credit Opportunity

CLO CMBS
ATTRACTIVE RETURNS Potential to generate attractive risk-adjusted returns
CREATES OPPORTUNITY Reinvestment ability
through tightening &
widening spreads		 Secured by first mortgages on
commercial real estate that can
be pooled with diversity
DIVERSIFICATION Backed by diversified pools of
senior secured term loans by
industry and borrower		 Diversification across borrowers,
tenants, geographies and
property type
DEEP MARKET Primary sources of
funding/capital for the
senior secured loan market		 Broad based investor
community across the
financial sector