Credits

Credit can play a useful and diversifying role in an investment portfolio. RIT seeks out primarily liquid credit opportunities across an extensive range of businesses where we believe that potential returns are unjustifiably high relative to the credit risk of the individual situation, i.e. that we view credit as mispriced.

Pillar
Uncorrelated strategies
Theme
Underpriced corporate credit
Status
Current investment
Geography
Europe, USA

The degree of this mispricing has increased materially in recent years, for reasons including sharply higher interest rates, the retrenchment of banks from lending beyond their core client base, and large volumes of debt that must be re-financed in the near future.

When credit markets become concerned about a particular situation – a profit warning, ratings downgrade, or an unpredictable refinancing – credit spreads can often widen more than is justified by fundamental analysis. This offers opportunities for experienced credit investors to earn equity-like returns with downside risk more akin to that of a credit instrument. This is the kind of asymmetry we actively seek.

Through close partnerships, we take advantage of these dislocations to build our core credit exposure via idiosyncratic opportunities. RIT has privileged access to specialists with expertise in specific sub-categories of credit markets. For example, RIT is invested in Tresidor, which has a focus on the European credit market, investing in investment grade bonds, convertible bonds, high-yield bonds, and leveraged loans.

Sample investments