After completing its first asset purchase, alternative conduit vehicle Freedom Park is set to take the Street by storm. Administered by Promontory Asset Finance Co., Freedom Park - which was designed to complement the changing risk appetite of investment banks in the evolving accounting and regulatory landscape - has already used one-fourth of its capacity and is planning to expand.
Since receiving its ratings assigned in March (see ASR 4/5), Freedom Park rapidly closed its first transaction, selling $500 million of commercial receivables into the new facility. Freedom Park now has $1.5 billion of capacity available and will look to move into all consumer and commercial assets, noted Chief Executive Officer Duncan Hennes.
The inaugural purchase was a portfolio of business loan receivables, wrapped by XLCA, noted Moody's Investors Service in its ABCP actions report for the week ending May 25.
Promontory is restricted to buying only wrapped assets, added Hennes, noting a goal of diversified surety exposure. Promontory has relationships with six triple-A rated financial guarantors: Ambac, Financial Security Assurance, MBIA, XL Capital, CIFG and FGIC, as listed by Moody's.
JPMorgan Chase acts as sub-administrator for Freedom Park, as well as the issuing, payment and collateral agent. While Promontory is an unrated entity, Freedom Park is rated P1' by Moody's and A1+' by Standard & Poor's.
With just seven employees in three offices, Promontory currently has a "pipeline that will allow us to grow quickly" with "numerous pending transactions," Hennes said. "We hope to grow Freedom Park to be very large," he noted.
Promontory recently hired ABS veteran Gwinne Berexa, formerly of Bank of America and Providian Financial, to work in a San Francisco office and further develop relationships with issuers and underwriters. Headquartered in Greenwich, Conn., Promontory also maintains a New York office in Manhattan.
"We aim to work with bank lenders, adding incremental capacity at a time when capacity has become constrained," Hennes added. "Conduit capacity is something that will become scarce going forward. Freedom Park is fully consolidated and Promontory is the primary beneficiary."
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