Omni Partners Raises $240M For Second Secured Lending Fund

Category: Short-term Lending
Published: Monday, 29 February 2016
Written by Super User

Omni Partners has held the final close of its second secured lending fund with total commitments of $240 million. 

The new fund, Omni Secured Lending Fund II LP, added additional commitments of $34 million following a soft close, leaving assets raised at $240 million. The final tally was first announced on February 1. 

As with its 2014-vintage predecessor fund, the second Omni secured lending fund provides investors with exposure to short-term loans secured against residential and commercial properties in the United Kingdom. 

The fund's lending requirements are strict, according to Omni. Loans, which vary in duration from 6 to 18 months, are asset-backed and carry maximum LTV ratios of 70%. Moreover, they are extended to professional property investors and typically support the acquisition of buy-to-let properties or refurbishment projects.

Exits are predominantly achieved by the borrower securing long-term financing or selling the property, said the firm. 

In order to deliver risk-adjusted returns, OSL II focuses on the short-term lending market where alternative lenders can obtain interest rate premiums and demand more security in return for speed and certainty of execution.

The alternative lending space has exploded since the 2008 financial crisis, with an increasing amount of expertise and capital entering the space in just the last two years. Driven by regulatory changes and tighter capital risk requirements that have led large banks to largely recede from lending to small- and medium-sized issuers, hedge funds and other alternative lenders have stepped up to fill the credit vacuum. 

"The $240 million of investment we have raised for the second vintage of Omni Secured Lending is proof of investors' continued interest in an unlevered lending strategy delivering attractive yields on assets of superior quality and short tenor," said Omni founder Steve Clark in a statement. 

In light of the institutional demand for direct lending alternatives, Omni is planning to launch a third Omni Secured Lending fund in April of 2016, added Clark. 

Founded in 2004, London-based Omni Partners manages approximately $972 million in assets across four strategies, including macro, event-driven, long/short equity, and secured lending.

Busy Stock Week Ahead: Global Action, Oil Swings, Earnings, Jobs

Category: Short-term Lending
Published: Sunday, 28 February 2016
Written by Super User

(Monday Pre-Market) The US stock market remains tethered to oil but Friday's action offered another gentle reminder: global stock and economic moves reach US shores quickly. Watch for continued attention on Asian economies and markets, and those of other global giants, in coming sessions.

Friday's story centered on a surprise move from the Bank of Japan, whose actions to shore up their economy touched off a global stock rally. Policymakers there surprised with a shift to negative interest rates. It's the first such move in Japan's history and was meant to "pre-empt the manifestation of [downside] risk and to maintain momentum to achieve the price stability target of 2%," members said in a statement released after a two-day policy meeting. "We will cut the interest further into negative territory if judged as necessary," the central bank said.

It's one more wrinkle for a Federal Reserve that has been leaning the other way--toward removing loose interest rate policy in the US For traders, it could become increasingly important to sift through Fed speeches for clues about how future Fed policy could fit in with a global aim to keep a slowing economy from eroding too quickly. The Fed next takes up interest rate policy in March. It raised its key short-term lending benchmark in December for the first time in nearly a decade.

Don't Forget Earnings

Part of Friday's broad-market boost came courtesy of Microsoft's (MSFT) earnings beat. It was a nice reminder that stock-by-stock and sector-by-sector trading still matters even if macroeconomic themes seem to dominate.

The earnings parade stretches into a new week, with big energy and pharmaceutical names among those slated to report. Exxon Mobil (XOM) will issue its earnings report pre-open on Tuesday. Pfizer (PFE) is due out with its results pre-open on Tuesday and Merck (MRK) reports pre-open on Wednesday. Yahoo (YHOO) and Chipotle (CMG) report post-close Tuesday, while General Motors (GM) hits the tape early Wednesday.

Operation Choke Point: Life Imitating Arts

Category: Short-term Lending
Published: Sunday, 28 February 2016
Written by Super User

Life imitates art far more than art imitates Life. So said Oscar Wilde.

The Obama administrations scorn for due process is exemplary.

In Chapter III of Alices Adventures in Wonderland, Mouse relates a long and sad tale of his history and encounter with Fury. Let us both go to law: I will prosecute you, the Fury responds. When Mouse observes that a trial would be futile without a judge and jury, Fury retorts: Ill be judge, Ill be jury...Ill try the whole case, and condemn you to death.

Alices Adventures were apparently the inspiration for Department of Justices Operation Choke Point.

As revealed in a 2014 Staff Report of the House Committee on Oversight and Government Reform, the program would be envied by the Fury.

The Department decides whether a legal industry skates to close to the line. Since close is in the eyes of the beholder, Operation Choke Point leaves the Department with limitless discretion.

Its prime target is the short-term lending industry that is as legal as selling gasoline. Other targets include online tobacco, firearms, ammunition, or pharmaceutical sales.

After an industry is identified, the Department issues subpoenas to federally regulated banks under section 951 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 for records of members searching for evidence of mail or wire fraud. The banks are encouraged to shut down accounts marked as questionable by the Department without notice to the holder or an opportunity to respond.

Compliance is typically forthcoming. Banks are hostage to the regulatory state. Their financial fate is in the hands of federal regulators. Why would they risk an expensive lawsuit or audit headaches with federal overseers like the FDIC, the Federal Reserve Board, or the Comptroller of the Currency over a single or few high maintenance accounts?

An inability to maintain a bank account, however, is the death knell for many companies. Thus, like Alices Fury, the Department plays judge, jury, and prosecutor in Operation Choke Point to wreak financial destruction on members of targeted industries.

Two samples of bank termination letters to licensed money service businesses and lenders illustrate the success of the Departments friendly persuasion:

*Bank of America: [W]e reviewed the nature of your business in light of current regulatory trends affecting your industry. After careful consideration weve decided to close your existing Small Business checking account....

*Bank of Hawaii: Bank of Hawaii has made a business decision to close your above-referenced business deposit accounts. The primary reason for this account closure is the Banks increasing business expenses involved with servicing this type of account for a customer that operates as a money service business and/or payday lender.

Operation Choke Point de facto makes banks agents of the government. That makes bank terminations of blacklisted accounts without due process constitutionally suspect under the Supreme Courts ruling in Bantam Books v. Sullivan (1963). In that case, the Court condemned as unconstitutional censorship the practice a State Commissions practice of sending book distributers a list of forbidden books whose distribution should cease if they wished to avoid the risk prosecution. The distributors predictably dropped all books on the list without any notice or opportunity to the book publishers to defend them as protected under the First Amendment.

Representative Blaine Luetkemeyer (R-Mo) and Jeb Hensarling (R-Tx) deserve credit for introducing the Financial Institution Customer Protection Act of 2015 (HR 766) to diminish Operation Choke Points due process shortcomings. It would prohibit federal banking agencies from requesting a depository institution to terminate a specific customer account or group of customer accounts absent a material justification beyond the reputational risk of the customers industry. Under the bill, all banking agency requests would be in writing, and would delineate the need the account termination and any suspected violations of laws or regulations by the account holder.

HR 766 would be a constructive first step towards inserting due process into Operation Choke Point and making it less like a page from Alices Adventures.

India's central bank keeps key lending rates on hold

Category: Short-term Lending
Published: Saturday, 27 February 2016
Written by Super User
Indias central bank keeps key lending rates on hold

Mumbai, Feb 2:

Ahead of the federal budget for the next fiscal, Indias central bank on Tuesday kept its key lending rates unchanged in line with stake-holders expectations.

The Reserve Bank of India (RBI) kept the repo and reverse repo rates unchanged during its sixth and the fiscals final bi-monthly monetary policy review.

Ignoring the clamour for an easing of monetary policy, as an instrument to boost the fledgling economic growth, Indias central bank maintained its short-term lending rates.

The repurchase rate, or the short-term lending rate of the central bank, remains unchanged at 6.75 percent and so does the cash reserve ratio (CRR), or the liquid money banks have to compulsorily hold, at 4.00 percent.

Accordingly, the reverse repo rate, or the central banks short-term borrowing rate, remains at 5.75 percent.

The Indian equity markets dipped immediately after the RBI came out with its final policy review for the fiscal. The barometer sensitive index (Sensex) of the Bombay Stock Exchange (BSE) plunged by 55 points.

The Samp;P BSE Sensex, which opened at 24,868.21 points, was trading at 24,770.26 points (11.10 am) down 55 points or 0.22 percent from the previous days close at 24,824.83 points.

Similarly, the wider 50-scrip Nifty of the National Stock Exchange (NSE) was trading in the red. It inched down by 20 points, or 0.26 percent, at 7,536.30 points. (IANS)