GlobalCapital: Guggenheim has been a major force in the esoteric ABS space for years. What attributes have allowed it to build and maintain this position?
Wishengrad: Our business is extremely client-centric. When we built it, we focused on delivering tailored solutions for issuer clients that met the demand of our institutional investor customer base. We differentiate from our competitors by providing senior focus from the most seasoned bankers, sales force and traders on the street; by having deep intellectual property across issuers and asset classes; and by partnering with Guggenheim’s pre-eminent investment banking coverage team which brings unparalleled industry perspectives. Our approach lends itself particularly well to esoteric asset classes and first time or newer issuers to the market. That’s in contrast to the bulge-bracket banks, that tend to be most active in the flow asset classes and compete primarily on the basis of financial capital. Guggenheim has focused on driving the best outcomes for our issuer and investor clients by having the deepest insights into what will work in the market on both sides. Whereas the bulge brackets use lending and the provision of balance sheet as an incentive for issuers to work with them, we rely on our execution and results. It takes a lot of human capital to originate and execute these complex transactions, but we pride ourselves on delivering extraordinary outcomes that separate us from our competitors.
Onkey: That differentiation has really become evident if you look at our track record with respect to repeat issuers. Issuers come back to us deal after deal. In 2024, we brought 53 deals to market with 32 of those deals from repeat issuers.
GlobalCapital: How does Guggenheim’s approach to investors in esoteric ABS help it stand out from other players in the market?
Wishengrad: We bring together our investment banking coverage and our structured products bankers to make sure investors understand the entire ecosystem of the industry they’re putting capital to work in. We often facilitate on-site meetings and site visits — for example, taking clients to visit data centres, so they could get an appreciation of the cooling and backup power needs, and how the cross-connects work inside the center. It’s a deep, fundamental, research-driven, old-school approach to investor education.
Onkey: Our distribution team prioritizes our clients’ deals, compared to other banks where the structured products sales force primarily focuses on trading mortgage bonds for the bank’s balance sheet and needs to balance their attention to ABS new issue against other priorities. Because we’re doing so much that is bespoke and new, our approach is much more of an educational effort — and that’s how our sales team approaches it as well. For example, before every single transaction we have a “salesforce teach-in,” where we block off time with the banking team and the salesforce. They have the chance to ask all their questions and really make sure they have a complete understanding of the business and the structure, so they’re fully armed to go out and explain it to their accounts. Investors really view our sales team more as partners, helping them understand how a transaction works.
GlobalCapital: Can you outline some of the innovative deal structures or transactions from 2024 that exemplify your team’s approach to complex financing challenges?
Wishengrad: With Zaxby’s $285m Series 2024-1 ABS deal, we created the first delayed draw note (DDN) issued in connection with a restaurant whole business securitization (WBS). We’ve executed DDNs in a number of other asset classes, such as in the music space. Our expertise meant we were able to evolve the DDN structure to suit the restaurant WBS asset class. For Zaxby’s, we came up with an innovative structure that offered distinct advantages compared to “growth VFN” structures utilized in the asset class historically. We successfully issued the DDN at the same fixed coupon that we issued the term ABS, which enabled the company to maintain leverage at an attractive rate as their cash flows grew over the next 12 months, without having to pursue another Term ABS transaction. It was a powerful illustration of how we’re able to be innovative and creative, even in an established asset class like WBS.
Another deal that stood out was Jersey Mike’s $850m Series 2024-1. That deal was close to eight times oversubscribed and achieved the lowest pricing spread among similar tenor transactions in almost three years. It was the issuer’s third WBS issuance sole-structured and left-led by Guggenheim since 2019, and the proceeds were used to fund a portion of the purchase price by Blackstone. It means a lot when the best issuers and sponsors in the market continue to choose us to structure and lead their deals. We see it as a significant validation of our franchise.
GlobalCapital: Looking ahead, what trends do you foresee in the esoteric ABS space, and how is Guggenheim positioning itself to remain at the forefront?
Wishengrad: Although markets have rallied on recent relief from tariffs, they may be choppier over the course of the year. But the test of a distribution franchise is largely how it performs in more challenging markets. That’s where our deep investor relationships and our nuanced understanding of the markets help us better prepare issuers and advise them on how to go to market. Ultimately, our franchise differentiates itself best in illiquid markets.