Following nearly a year on the CDO sidelines, Institutional Debt Management is planning to reenter the market in the near future, says IDM president Tom Finke.
The firm had ramped up and closed seven CLOs in 24 months before shutting its pipeline last October, opting to slow down and focus on its $3.6 billion in assets, especially in light of the challenging credit environment and weak loan market.
In the meantime, IDM has also focused on growing its management infrastructure. To that end, IDM has bolstered its staff, adding Bard Ives as a managing director focusing on structuring and operations. Ives joins from Kennedy, Covington, & Hickman LLP, a Charlotte-based law firm, where he was a partner heading up the structured finance practice.
As far as holdings in its seven outstanding deals, the average issuer overlap is about 44%, and average issuer concentration is less than 1% per credit, according to Finke. The latter reflects IDM's focus on portfolio diversification as a defensive strategy in the current economic downturn. Sectors IDM has chosen for its CLOs include specialty chemicals, largely for the sector's price stability versus commodity sector; e.g. Resolution Performance Products and OM Group. Diversified manufacturing is represented via companies with good market position and modest leverage. Healthcare has a healthy allocation in IDM's portfolio, and is diversified among various subsectors, including pharmaceutical and lab testing companies. In the cable sector, Charter Communications and broadcasting concern Adelphia are core holdings.
Like many CDO managers, IDM has meaningful telecom holdings, but mostly in the wireless sector.
The firm has a total of 28 professionals, with on average credit coverage per research analyst of 25 to 30, which is the outer-limit, Finke says.
When asked how IDM's seven deals are performing, Finke resplied, "We're performing very well relative to the market."
In addition to day-to-day management, IDM has been focused on improving its customer communication. "If someone gives me money to manage, I feel they have a right to know what's going on," he added.
The firm's first CLO in 1998 is called ELC (Cayman) Ltd. IDM, which is highly focused on the leveraged loan market, is a third party asset management company, wholly owned by First Union Corp. First Union Securities has been the traditional lead manager for IDM deals.