ACA Capital, the New York-based financial insurance company, is ramping up its exposure to leveraged loans as an extension of its corporate credit business. Since the fourth quarter of 2004, the firm has bought $100 million in loans and recently hired John Veidis as an analyst from Mountain Capital, The Mizuho Corporate Bank's loan asset management arm.
"ACA is always looking to expand. The firm's assets have grown significantly and ACA wants to diversify risk," said Vincent Ingato, managing director and portfolio manager for ACA's corporate credit products. In addition, despite loan spreads tightening, liability pricing has improved significantly over the past several years ensuring an attractive arbitrage, he said. Ingato joined ACA last April and was previously the co-head of leverage finance at Mizuho, where he worked with Veidis.
Ingato explained that ACA has an asset management business that has originated 10 structured product deals with $8 billion under management. Approximately $3 billion of the underlying assets are in corporate debt, comprising mainly investment-grade bonds and credit default swaps. The rest is invested in asset-backed securities, mainly RMBS and CMBS.
"There are many firms in the leveraged loan space, but we have significant experience managing CDOs," said Ingato. In addition to proprietary software to manage the assets, the firm can draw on the quantitative skills of the CDO modeling group. The corporate research team is headed by John Haltmaier, who has seven analysts on the team, segmented by industry.