At present we see investors preferring to invest in junior tranches in private securitisations, whilst the senior tranches in public securitisations are generally in high demand.  From a product perspective we look for opportunities across both private and public securitised deals, where assets, commonly a portfolio of loans, are pooled together to form a single debt investment opportunity, as well as across the larger publicly offered securitised deals. 

The reason why we currently prefer senior tranches in private securitisations, yet prefer more junior transactions in publicly offered securitisations, is supply and demand.

Having raised billions of dollars through iPartners, we understand investor preferences.  Our  fund manager/institutional investors lean towards lower risk/return investments such as senior secured tranches, whereas self-directed investors and SMSF investors show a preference for the higher risk/higher return junior secured tranches.

As iPartners investor database is heavily skewed to direct investors and SMSF investors, there is less capital looking for senior tranches in the privately offered deals, therefore they tend to price wider relative to their risks.

In public markets, we consistently see the most senior tranches being purchased largely by banks which drives the senior tranches of public deals to be tight in yield relative to their risks, whereas the lower tranches are purchased by boutique investors (that have smaller supplies of capital) which leads to wider pricing of junior tranches.

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