CORE INCOME • PRIVATE DEBT
CORDET was founded in 2013 with the aim of providing private debt, direct lending and alternative funding solutions to mid-market companies in Northern Europe while also addressing the need of many institutional investors for attractive risk-adjusted core income-focused credit investment returns. In 2017 CORDET successfully raised +EUR 400 million including its first direct lending fund and other segregated managed accounts.
We originate, evaluate and structure our debt investments locally through offices in London and Stockholm and we seek to develop and maintain long-term and sustainable partnerships with borrowers, banks, intermediaries and financial sponsors.
Our primary credit focus is on capital preservation and on minimising unexpected defaults. As a result, our decision-making process is based on thorough fundamental, bottom-up analysis, conservative structuring and appropriate pricing.
Instead of relying on a single individual, we have a differentiated Investment & Credit Committee and credit process with over 150 years of credit / underwriting committee experience over three credit cycles.
We strive to create alignment of interests through performance-based rewards and by investing capital alongside our clients. We focus on contractual returns by capturing the illiquidity premium in non-investment grade (often unrated) private debt.
In order to best serve the needs of our investors in a changing regulatory environment, we seek to provide transparent, innovative investment instruments and flexible core-income solutions. We maintain a close dialogue with investors to ensure that our product offering is tailored to their needs.
Our mission is to support our clients to make relevant, enduring and material improvements in the their financial performance, and to build a great firm which attracts, empowers and retains exceptional talent.
- Talent excellence
- First-class business
- Long-term capital
- Core Income
- Private Debt
The crisis of 2008 has fundamentally changed the world financial landscape. The force of the crisis, and the way it quickly spread through the world economy, came as a shock to regulators. In many countries, taxpayers had to save banks that were considered to be of systemic importance with huge bailouts. Clearly the regulatory system needed to be improved in a number of ways.
Now, a new regulatory structure has been agreed on internationally. Banks are required to have considerably more and higher quality capital to absorb losses in case of a crisis. They must hold liquid assets to a much larger extent than before to avoid a situation where they cannot deliver up on their short-term commitments.
Implementation of the new regulations is underway and will gradually hit the banks over the next few years, which will make capital and liquidity more expensive. Other regulations and reporting requirements will additionally increase the costs of running a bank.
To cover the additional costs, banks will need to increase margins, increase efficiency and achieve a higher portion of customers’ wallet share. They will raise interest rates on their loans to customers to compensate for the cost of the extra capital required. In addition, they will offer shorter maturities to reduce their duration mismatch between loans and funding and hence their cost of liquidity.
As a consequence, good borrowers will look for other sources of credit. The rapid growth of the corporate bond markets in many countries, not least the Nordic Region, is a sign of this. But there is also a growing supply of credit from other sources outside the banks, where money can be channeled directly from investors to good, bankable creditors.
CORDET is a part of this development of the credit market outside of banks. CORDET is a good example of this kind of a very transparent business, where risks can be clearly identified and monitored.
The development of a new credit market may certainly offer more available and cheaper credit to businesses than would otherwise be available. In many European countries the availability of credit has been considered a problem since the crisis. It may also offer better investment opportunities for fixed income investors than instruments such as government and investment grade bonds. Moreover, given the new regulations, it may offer opportunities for banks to offload some less profitable credits from their balance sheets, whilst maintaining customer relationships and their day-to-day business.
Lars Nyberg, CORDET Director and Chairman of Regulatory & Compliance Committee