Bank Loan Capabilities

  • Harch Capital Management has been participating in the syndicated loan market since 1994.
  • We have managed billions of dollars of senior secured banks loans in a number of formats:  leveraged total return swaps, synthetic CLO’s, fully underwritten CLO’s (3), separately managed accounts for pension funds, high net worth individuals and families.
  • We have established relationships with every major bank that syndicates corporate term loans.
  • We are an active participant in primary loan syndications and have access to just about every less- than-investment-grade, senior secured, large cap term loan brought to market.
  • We are also an active participant in the secondary loan market and have outstanding relationships with par loan trading desks at the major money-center banks.
  • Although non-investment grades loans are not publicly registered they rank among the most liquid fixed-income securities in the marketplace.
  • Senior secured term loans are floating rate instruments and therefore are generally immune from interest rate volatility.  Loans display lower price volatility in volatile interest rate environments.
  • Given their senior-most position in a corporation’s capital structure, even in the unlikely event of default, recoveries are better than other fixed-income securities.  The seniority of term loans in periods of low corporate defaults (<3%) tends to make them price inelastic.
  • The high yield loan market today exceeds one trillion dollars and loans rank among the most liquid of high yield debt instruments.  We have successfully liquidated portfolios in less than 20 business days on more than one occasion when requested by clients without any material principal loss.
  • The primary loan syndications we migrate to are generally rated BB, $500MM or greater in size, senior secured with minimum LIBOR floors and generally are offered at discounts from par value.   As a result, once we have a new portfolio fully invested, we typically have the opportunity to trade out of seasoned loans at premiums into newly syndicated loans at discounts thereby enhancing the total return on the portfolio beyond its weighted average yield.
  • In the domestic economic environment, high yield senior secured loans generate annual yields in the 5% to 6.5% range and the harvesting of new issue gains can add another 2% to 4%.