All the Credit Credit Markets in Transition: Asset-Based Finance
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Feb 19, 2025 Edwin Wilches, Co-Head of Securitized Products at PGIM Fixed Income, dives into the booming world of asset-based finance (ABF). He discusses how ABF is reshaping investment portfolios and the factors driving its popularity. The conversation highlights trends like music royalty securitization and the critical role of non-depository institutions in today’s credit market. Edwin also navigates the nuances of independent decision-making in ABF, emphasizing the importance of technology and specialized teams for successful investment strategies.
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ABF vs. Securitized Products
- Asset-based finance (ABF) loans are secured by specific assets with contractual cash flows.
- ABF is used for private market investments, while securitized products are public market investments.
ABF's Rise
- Regulatory changes post-GFC, bank behavior shifts, and high-quality assets entering the market drive ABF's growth.
- Fixed income investors seek diversification, and ABF offers attractive yields and opportunities.
Key ABF Platform Capabilities
- Scale, in-depth research, and quantitative modeling are crucial for a successful ABF platform.
- Investors should understand company valuations, deal structures, regulatory risks, and use quantitative methods.