Reversing the yield curve in the US is certainly a warning light, but we will probably not see a short-term recession, but moderate growth. “
Stan Sokolowski, director of the CIFC Senior Lending Fund, explains in a Globe interview that the lending industry is capable of responding to a variety of economic environments and market conditions, and should be a key part of any investment portfolio. “2018 was a case study when about 90% of financial assets yielded returns. Negatives, while loans increased by 1%, showing only a fraction of the volatility “Senior Secured Corporations Loans” is taking its first steps in Israel, with institutional bodies following their peers around the world and spreading their investments in overseas loan funds as well. Local bodies over $ 4 billion in senior lending funds.The CIFC Foundation, one of the most prominent players in the US, represented in Israel by 4F under the management of Yossi and Kenin and Itai Barkan, currently manages about $ 21 billion. The company has over 200 institutional clients, including two of the largest public pension funds in the United States.The CIFC Fund operates in two key strategies: Credit CLO – Securitization Backed Loan, and Senior Secured Loans.The value of the US industry is currently estimated at over $ 1 trillion. In Israel, Smartbull figures show that a total of $ 2.9 billion is invested in the industry through 43 Israeli institutional bodies, by 10 different fund managers. Insurance $ 873 million in senior loans, Lamp with $ 603 million, Harel with $ 415 million and Migdal with $ 272 million.How It Works? A US bank receives a request from a large company for a loan. The bank examines the application and, if answered in the affirmative, concurrently presents the loan details to the loan market companies and decides on the basis of the information they received about whether the loan was worthwhile. The company that finally agreed to a loan (called a “senior loan” “), Packing tens to hundreds of additional loans that she has agreed to pledge to marketable loan funds.
In order to maintain an identity of interest between the bank and the company that purchased the loan, not all the loan is transferred to the holding of the company, but part of it remains in the bank’s balance sheet, among other things to spread the risks – where each fund has its own limitations. Even if each individual loan may be relatively risky, once grouped together, the negotiable loan fund may receive a good rating from the relevant rating agencies. Stan Sokolowski, director of the CIFC Foundation, provides a behind-the-scenes glimpse of fund management.How do you see the global economy today, are we facing a recession?The world is in a phase of moderate growth, but still growing. Despite the geopolitical events and tensions associated with trade, we remain a world of growth, albeit under-trend, with low inflation and supportive policies of the central banks. This is a period of high volatility and constant conditions. Over the past decade, we believe they will continue in the future. In the US, we are seeing a deep reversal at the front end of the yield curve. Does it indicate a recession or the official end of the credit cycle? There are many opinions on both sides of this question. For us, this is definitely a warning light. However, there is probably no short-term recession, otherwise the credit spreads would be significantly greater today. The yield curve is another indicator of moderate growth. “$ 1.2 trillion, mature and liquid market”What makes your investment model unique?Discipline. Our team of professionals consistently apply the same rigorous standards for credit underwriting and risk management. We collectively use everyone’s knowledge to better understand potential risks, combining our basic credit selection with dynamic relative value analysis while actively managing risk.”What characterizes the market in which you operate – what size of the loan market is relevant to the fund and how has it developed in recent years?
“We are part of traditional assets that provide fixed income, such as emerging market bonds, investment grade or HY bonds. The senior loans differ on two main issues: first, they are secured by collateral, and secondly, are subject to variable interest rates. Issued, invested, rated and traded loans are underwritten. In fact, more than 90% is held by institutional investors including CLOs, insurance companies, pension funds, mutual funds and other asset managers, and over the last two decades the leveraged lending market has grown to $ 1.2 trillion. , And is now similar in size to the HY bond market. The market is both mature and liquid, with a trading volume of more than $ 700 billion a year, according to S&P Capital IQ BAML as of last April. “
Why be exposed to loans? Isn’t it better to give more weight to these companies’ bonds?Loans should be a key part of any investment portfolio because they solve many challenges that traditional assets are unable to solve, including an element of collateral protection, liquidity, lower volatility, lower correlation with other asset classes, and seniority and income generation. Traditional fixed income products have not met expectations in the recent period, with 2018 being a test case, with around 90% of financial assets generating negative returns, but contrary to the trend, loans recorded a 1% increase, showing only a fraction of volatility. These assets proved to be a ‘safe haven’ when P.O. Yielding yen and lower volatility unpredictable environment. In the end, during the last 25 years of lending industry showed positive performance in a variety of economic environments (except for the great financial crisis, was the exception). “What collateral does these loans have, and are they still high quality or has the collateral value decreased?Sokolowski sees an advantage for the US lending market over the European loan market in terms of size. There is no meager moment in nature: a compromise agreement in the delay of competitionTeva has paid $ 69 million to the state of California as part of a settlement for non-compete agreements and delayed competition in generics • Non-compete agreements allow one drug company to enjoy monopoly control, while the branded drug that is supposed to be against another company is delayed, which prevents price Remedies for Consumer California Attorney Xavier Becker announced a compromise in a lawsuit against several drug and nature companies
(2.805 + 1.04%)Most notably, Israel, under the charge of entering into pay for delay agreements, under which the companies delayed the launch of generic drugs into the market and damaged the competition. Under the settlement agreement, pharmaceutical and nature companies will pay almost $ 70 million to the state.Non-compete agreements actually allow another drug company to enjoy continued monopoly control, while the branded drug that is supposed to stand up to competition is delayed, which prevents the drug price from falling for the consumer. Environmentalists say the amount is part of a compromise arrangement that has already been signed.The first arrangement with Teva deals with a delay of almost 6 years (between 2006 and 2012) the entry into the market of the drug Probigil, which is intended to treat sleep disorders. This is a drug that came to Teva as part of the Splon deal in 2011, so most of the delay was made even before Teva became the company’s owner. The state attorney argued that the delay in generic drug competition led to artificially high costs to consumers. As part of the settlement agreement signed, $ 25.3 million will be allocated to a special fund for California drug consumers at that time.
The additional case agreement, also signed with Teva along with the Ando and Takiko companies, deals with similar practices that prevented a generic version of the drug Lidoderm from entering the market for two years, but in this case a much smaller amount, $ 760,000 from the companies involved.The drug companies’ collusion in these dark and illegal agreements not only stifles competition but burdens our families and patients – forcing every person in California to pay a higher price for life-saving drugs. It’s no less than playing with people’s lives,” said the attorney general In the cold. “California doesn’t have to pay an excessive price to afford these prescriptions. That’s why I strongly advocate stricter laws, to discourage conduct like this and to build on enforcement actions like the ones I’m announcing today. Together, these actions will help us push the greedy drug companies and fight For California families. ” Price coordination agreements are made when the generic brand and drug companies prevent litigation by agreeing that the brand name will distribute it generically to prevent it from entering the market with its generic version of the brand drug for a period of time.Last June, the Oklahoma court approved the $ 85 million settlement with Teva to settle claims that Teva helped fuel the painkiller epidemic, along with Johnson & Johnson and Purdue.Teva acquired Splon in 2011 for $ 6.5 billion, and in retrospect it became one of the least successful acquisitions made by Israeli company. Since the acquisition, Teva has made a number of accounting write-offs for impairment of medicines that came from the cup, and had to make significant payments to the authorities due to the cups prior to the purchase.
For example, in 2016, a compromise agreement was signed with 48 states in the United States, under which Teva paid $ 125 million for damage done by Splon when it delayed the entry of generic competition to Provigil. Earlier, Teva paid the FTC $ 1.2 billion in compensation for wholesalers, pharmacies and insurance companies that paid overpayments due to the blocking of generic competition. Bezeq Announces Profit Warning: Subsidiary Pelephone May Delete Up to NIS 1.1 Billion in Second QuarterPelephone’s Board of Directors discusses the possibility of deleting the giant ahead of the second quarter of 2019’s valuatio(232 -4.53%) On Monday, following the closing of trading on the Tel Aviv Stock Exchange and preparing for the second quarter of 2019, Pelephone’s board of directors held a hearing today on signs of impairment and Pelephone’s multi-year forecast. As the discussions show, and given the projected cash flow, Pelephone may record a decline in value, which could result in a write-off of between NIS 800 million and NIS 1.1 billion.The announcement that Bezeq acknowledges that contrary to all market expectations, Pelephone estimates that the mobile market is far from recovering, and thus has a very bad news for the entire telecommunications market and investors. This is an initial internal valuation, and a valuation by an external valuator is expected to follow. “As a result of this and in accordance with its results, the amount of impairment in the Company’s books may be different and even materially different from what is stated above,” the statement said to investors. Deleting the value may erase Pelephone’s reputation. Recall that Pelephone’s value in Bezeq reports as of the latest valuation gives the subsidiary a value of NIS 2.914 billion.The announcement today came in bad time for Bezeq in the face of discussions to acquire control of the controlling shareholder, in front of the Surchelight and David Forer Fund.
Recall that the first quarter of 2019 Pelephone finished with a net profit of only NIS 2 million, similar to the previous quarter. Pelephone’s revenues in the first quarter fell by about 3% to NIS 417 million, compared with NIS 431 million in the corresponding quarter last year. The decrease in revenues was due to the continued erosion of tariffs as a result of switching existing customers to cheaper packages, which include a wider browsing volume.Pelephone is heading for one of the most important and big projects in the communications market in recent years – introducing the fifth generation alongside changing the frequencies in which it operates. This is a tremendous project that the entire company will be required to enlist.