By Sayed Kadiri, Creditflux
Thursday, 06 April 2017
Prytania Investment Advisors has got off to a strong start in 2017 with the manager’s Athena Fund gaining 8.4% through February. The London-based firm runs a diversified asset pool with Athena invested in CLOs, CMBS, CRE CDOs, RMBS and trups CDOs, and its outperformance has come on the back of contributions from many different parts of its portfolio.
Chief executive officer Mark Hale says that trups CDOs have been rallying in recent months and this has boosted Athena, which was up 5.90% in January and 2.49% in February. “Trups CDOs are benefiting from strong fundamentals in the bank sector at the moment, while rising real estate prices and hopes for deregulation in Washington have also boosted sentiment towards these US lenders,” says London-based Hale.
But the star performer for Prytania was a special situation investment relating to a European CMBS position. The fund manager purchased the asset for Athena in December at around 57 cents and has seen its value rise in to the high 70s. “The servicer in this deal became more proactive and this has resulted in higher and quicker realisations on certain loans than the market expected. As a result, the class A notes Prytania owns in its Galene Fund have almost fully paid down and our Class Bs have rallied strongly on the back of this,” says Hale. He adds that the Class Bs are now expected to return par.
In Europe, CLO spreads have reached their tightest levels since the financial crisis in 2008. Prytania has been an active buyer of junior European CLO debt over the last 18 months or so, but Hale says that the firm more recently bought into the equity of a new issue CLO with the lowest cost of funds since the crisis.
He reasons that CLO equity can benefit from optionality if there is renewed volatility and a sell off in loans.
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Chief Investment Officer, Mark Hale, discusses the attempt by banks to relaunch synthetic CDOs with the Financial Times.
© The Financial Times Limited 2013