Asset managers

Asset manager-led transactions targeting asset-based finance (ABF) gained momentum following the regional banking crisis, which are typically the go-to for consumer and small business loans.

The venture, dubbed Sculptor Loan Financing Partners, will manage investments in the equity tranches of Sculptor's own CLOs in the U.S. and Europe.

Basel Endgame rules will dramatically boost the capital provisions banks have to set aside to backstop lending, with the burden falling most heavily on big money center banks.

Contenders see plenty of room for the market of EFTS investing in CLOs to grow. The question is if they can potentially usurp some of banks' dominance in AAA-tranche investing.

The new business will take in money from insurance companies and invest in mortgages and in private structured credit. It will look to draw business from an insurance industry that's "looking to diversify.

So far, the wager appears to be profitable. The private equity pair agreed to purchase their shares at $12.30 each, and the stock rally after the deal was announced means they are sitting on a paper profit of more than $90 million.

BlackRock will join an increasingly crowded field. Private equity and credit managers have been angling to buy dislocated assets from banks.

It's a debate that matters more than ever, as bond traders ponder the end of the Federal Reserve's aggressive campaign of interest-rate hikes and wager on cuts starting within months.

Demand for AAAs is still challenged as banks, the biggest buyers, are facing too much uncertainty and volatility around their balance sheets.

Treasury Secretary Janet Yellen said she prefers to have the Financial Stability Oversight Council flag hazardous activities by nonbanks rather than subject specific firms to heightened supervision.