Manulife | CQS Investment Management (MCQS) today announced the close of its Regulatory Capital Vintage III, raising a total of $1.1 billion across Manulife CQS Regulatory Capital Relief III Fund and separately managed accounts. This fundraising underscores MCQS's experience in the regulatory capital space, leveraging both its deep market knowledge and extensive relationships with issuers. MCQS has been an investor in this sector since 2014 and incubated its regulatory capital strategy within its broader asset-backed securities platform before launching the first standalone longer-lock regulatory capital vintage in 2019.

"Regulatory Capital is core to our structured credit platform and a space in which we have the highest conviction for investors seeking stable, risk-adjusted income," said Soraya Chabarek, President and CEO, MCQS. "What resonates is that it's a diversifier from corporate risk in client portfolios and complementary to private markets exposure. We've been at the forefront of this market for over 10 years, shaping its evolution in partnership with the European champion banks with whom we have long-standing relationships. To that end, we've invested more than $3 billion in Regulatory Capital transactions since 2014 and are hard at work doing the deep due diligence on the active pipeline of deals as this asset class grows."

With an ever-expanding range of participating banks, regulatory capital relief offers high-income opportunities supported by strong credit quality. MCQS's vast deal database holds more than 10 years of detailed transaction data, which can be a differentiator in today's dynamic market, as deal selection is more critical than ever. The team actively pursues both bilateral and club deals, leveraging their strong relationships with banks and execution experience. Their expertise in structured credit enables them to analyze deal structures and apply robust stress testing, selecting transactions with the strongest risk-adjusted return potential for investors. This has resulted in high decline rates (of 75%), historically low default rates, low volatility and low correlation to broader credit markets.

"At its core, this strategy is an opportunity to access the highest quality loans on a bank's balance sheet in structures that seek to generate high levels of regular income. What's exciting is that this market is growing at around 25% per annum. With our extensive deal database of hundreds of transactions from the last decade and a robust investment process, we think we have a unique perspective in this market, underpinned by our long-term partnerships with issuing banks to access opportunities. My team and I are extremely active in ramping the portfolio into year-end and working with issuers to shape transactions that best serve investors," added Jason Walker, Co-Chief Investment Officer, MCQS.

Given the strength of the opportunity set and momentum in the current pipeline, MCQS has accelerated plans to launch a fourth vintage of the strategy together with asset backed finance (which makes up more than a third of assets within the structured credit platform) on a standalone basis.