ABI SUPPORTS DISTRESSED DEBT TEAM OF A EUROPEAN ASSET MANAGER
Asset management team of a leading financial institution in Europe wanted outsourced analysts support for its Distressed Debt Investment team.
SCOPE OF WORK
The client needed a ready to deploy team with deep expertise in distressed debt analysis, credit modelling and investment monitoring.
The specific scope of the work included:
- Investment screening on quantitative and qualitative assessment
- Deep-dive analysis on shortlisted credit situation
- Credit modelling and recovery analysis with scenarios & sensitivity
- Credit note for the investment committee
- Continuous monitoring of coverage universe along with macroeconomic and policy development
- Gleaning through bankruptcy filings, settlement etc. to assess the recovery value
- ABI deployed an experienced team of 4 analysts, each with robust experience distressed debt and vulture investing research
- Robust engagement governance framework based on three tiers of project performance monitoring – that helped both sides to reach business-as-usual phase quickly:
- Monthly Review by Steering Committee comprising ABI Program Director and The Client Program Director
- Weekly Review by the Client’s Lead Analysts with ABI Program Manager and the assigned team
- Daily call and status update to streamline priorities and manage urgent work requirements
- ABI team developed quant database to screen potential distressed debt situations and shortlist the most promising ones. Moreover, on a weekly basis, ABI time covers all the ongoing bankruptcy cases and new bankruptcy filings across markets
- ABI conducts deep-dive analysis on shortlisted credit situations and identifies sources of value, their recovery potential followed by an incisive analysis on capital structure and seniority thereof to prepare cash flow waterfall with recovery analysis; additional focus on evaluating covenants, subordination, guarantees and ring-fencing provisions
- ABI also credit notes with incisive analysis for the consideration of the investment approval committee
- ABI analysts monitor the development and proceedings on all shortlisted and invested credit situations continuously to update the Client’s traders and analysts on any change in credit scenario
- Focus on data-security and well-defined access structure keeps the data and information security as the same level as is found in the internal team. All sensitive data were maintained in a secured data room with VPN access to ABI analysts
- Time-efficient as experienced analysts work on the assignment and client could quickly ramp up the coverage without adding extra capacity at its end.
- Continuous communication and discussion on interim deliverable meant that the entire team was aligned with the same objective as that of client