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Old Hill Partners: Fed Inaction, Equity Volatility to Propel Asset-Backed Lending

January 29, 2015, 07:13 AM
Filed Under: Industry News

As the Federal Reserve holds firm on keeping interest rates the lowest in decades, while ceasing to pump up stocks with quantitative easing – causing increased market fluctuations – enthusiasm will remain elevated for investors seeking a high risk-adjusted return through asset-backed lending, says Old Hill Partners in its most recent monthly commentary.

As the firm wrote in its Asset-Backed Lending Outlook 2015 paper, the economic foundation underpinning U.S. businesses will remain strong, while the Fed won’t even start normalizing interest rate policy for at least several more quarters. For investors, return profiles for other, more liquid yield-based alternatives remain constrained due to more stringent regulations on traditional lenders and persistently low risk-free rates.

“We focus on the generation of attractive yield with a heavy emphasis on capital preservation,” said John Howe, CEO of Old Hill Partners. “We do this by way of a proven approach that combines exhaustive risk mitigation techniques, honed over decades of experience, with creative lending structures. The result is a process that provides investors with consistent, above-average risk-adjusted returns and issuers with the funding and flexibility they need.”

Howe also notes that the need for alternative lending solutions, particularly for small- and medium-sized businesses (SMEs), remains high. It is difficult to understate just how important these companies are, as SME’s account for nine out of ten companies globally and 60% of the employment in G-8 countries. In the U.S., SME’s are responsible for roughly half the country’s annual GDP, the lion’s share of its growth, and over 60% of new job creation.

Old Hill Partners Inc., headquartered in Darien, CT, is an SEC-registered investment adviser with significant experience in all facets of asset-backed lending and alternative investment management. The firm offers customized lending products and services to small and middle-market clients and works closely with borrowers and partners to provide creative funding structures to support near- to mid-term growth initiatives. Founded by John C. Howe in 1996, Old Hill has funded approximately $600 million in asset-backed lending transactions.

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