CVC Credit Partners European Opportunities Ltd ORD (LON:CCPE) seeks to achieve gross returns of 8-12% a year by investing in a portfolio of high-yielding debt investments with a bias towards Western Europe. The majority of the portfolio is in floating rate, senior secured loans, which, while rated below investment grade, rank higher in the capital structure than equities or bonds. The strategy blends performing credit, where returns come mainly from income, with more opportunistic investment in credits that are priced below par, offering a yield pick-up as well as capital growth potential. In spite of sustained strong issuance and refinancing, which puts downward pressure on yields, the managers see opportunities from accelerating disposals of non-core assets by banks, industry dislocations in areas such as retail, and expected periods of volatility around interest rate rises.
Investment strategy: European debt specialist
CCPEOL invests through a Luxembourg-based investment vehicle, CVC European Credit Opportunities (CEC), taking advantage of the manager’s deep resources and strong networks in performing credit and credit opportunities. Performing credit consists mainly of senior secured loans from large, liquid issuers, while credit opportunities targets credits trading well below par, offering capital upside through restructuring or corporate actions. The fund is diversified by geography (23% is in the US) and industry, although the majority of investments are in European issuers.
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