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T2 sees buying opportunities in syndicated corporate loan market

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T2 Income Fund, which invests in the US syndicated corporate loan market, has recently seen increased interest in the shares of the company, reflected in an increase in the share price of 143 per cent over the last three months. 

The syndicated corporate loan market is an asset class that is largely unknown by retail investors. The market in the US is around USD1trn in size but has traditionally been difficult for most investors to access. 
 
The objective of T2 is to provide investors with a stable and predictable dividend yield, with long term preservation of net asset value. T2 offers retail and institutional investors the ability to gain exposure to the US syndicated corporate loan market through an Aim quoted investment company.
 
T2 Advisers, the investment manager of T2, says: “Over the past 18 months, the syndicated corporate loan market has seen both unprecedented price declines and unprecedented volatility. Although prices remain depressed across most sectors and ratings categories, we have seen a recent upward move from the lowest price levels reached during the first quarter 2009.  
 
“Our view is that certain larger-issuer broadly syndicated corporate loan prices do not at the moment adequately reflect the spreads necessary to compensate investors for the risks involved. We believe that concern over worsening fundamentals (lower GDP figures, increased unemployment rates and, inevitably, increased corporate loan default rates combined with lower recovery rates) into the latter part of 2009 will likely cause loan prices to retrace at least some portion of their upward move over the last 4 months. We believe that this will offer interesting buying opportunities through the end of 2009 and through the first half of 2010.”

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