Investment Portfolio
Senior secured bank loans represent the substantial majority of
assets underlying the portfolio and are financed via term,
non-recourse, cash-flow based liabilities. TFG currently
gains exposure to these assets primarily through investments in the
residual tranches of collateralised loan obligations
(“CLO”) products and also has had exposure through
previous investments in the residual tranches of collateralized
debt obligation (“CDO”) products, which are both
securitized interests in underlying assets assembled by asset
managers and divided into tranches based on their degree of credit
risk.
The asset class primarily represented in TFG’s current
portfolio consists of leveraged loans, comprised of (a) broadly
syndicated senior secured loans of U.S. borrowers; (b) broadly
syndicated senior secured loans of European borrowers; and (c)
middle-market senior secured loans of U.S. borrowers. Notwithstanding the Investment Manager’s
focus to date on the leveraged loan asset class, the Investment
Manager may seek to achieve its investment objective through
investments in other opportunities, assets or asset classes, which
may be unrelated to the leveraged loan asset class.
The Investment Manager actively manages TFG’s investment
portfolio as systematic credit analysis can serve as an effective
risk management tool. It seeks to regularly evaluate TFG’s
underlying credit exposures as well as CLO quality and coverage
tests, as it believes this may more effectively position the
portfolio against outsized losses.