MATH Briefing - 3rd Quarter 2014: US Debt Markets: Developments in Non-Bank Lending and Its Impact on Middle Market US Companies

September 30, 2014

12:15pm - 1:30pm

MATH (Markets And The Hill) Briefing Series
Capitol Hill, Washington, D.C.
By invitation only


The composition of US debt markets has shifted as traditional banks retreat and non-bank lending sources fill the void. Business Development Companies (BDCs), Collateralized Loan Obligations (CLOs), and private lending pools of capital now provide more than 25% of funded loans to US companies. CLOs are structured vehicles that buy corporate loans, bundle them together, and sell a range of different risk/reward tranches to investors. BDCs lend directly to companies or through CLOs, but, unlike banks, pass their net income directly back to investors. CLOs suffered practically no impairments during the financial crisis and have continued to perform today.

Recent regulations, however, could significantly change these markets. This briefing will provide an overview of the US debt markets and how BDC and CLO structures work and relate to one another, the growth of these markets and their impact on market participants and the ability for corporate America to finance its business activities, and the effects of regulatory responses to the financial crisis.


John Clements is a Managing Director in the Global Structured Credit Group at Citi and is Co-Head of the CLO Primary business. Citi's CLO Primary business is the market's leading CLO origination, structuring and distribution franchise. Clements joined Citi in 2001 after working six years in the Structured Credit Group at JP Morgan. He began his career in Chemical Bank's Middle Market Lending Group after completing the bank's Credit Training Program. Clements earned a B.S. in Management from Rensselaer Polytechnic Institute.

Meredith Coffey is Executive Vice President of the Loan Syndications and Trading Association (LSTA), and runs its Research and Analysis Department. Coffey co-heads the LSTA's regulatory and CLO efforts, which help facilitate continued availability of credit and the efficiency of the loan market. In addition, she heads a team of analysts that are responsible for analyzing current and anticipated loan market developments. Coffey has published analysis on the syndicated loan market in numerous books and periodicals, presents frequently, and has testified before Congress on issues pertaining to the loan and CLO markets. Prior to joining the LSTA, Coffey was Senior Vice President and Director of Analysis focusing on the loan and adjacent markets for Thomson Reuters LPC, working in and running loan research for 15 years. Coffey has a B.A. in Economics from Swarthmore College and a graduate degree in Economics from New York University.

Ken Kencel currently serves as Vice Chairman of the Board and a member of the Investment Committee of Carlyle GMS Finance and NF Investment Corp. Prior to that, Kencel served as President of both firms. He previously served as President and Chief Executive Officer of Churchill Financial from its founding in February 2006 until its acquisition by Carlyle in November 2011. Previously, Kencel served as Head of Leveraged Finance for RBC Capital Markets, a division of Royal Bank of Canada, from 2001 to 2004. At RBC Capital Markets, Kencel was responsible for all leveraged finance activities and for managing RBC Capital Markets' relationships with private equity investment firms, and also served on the firm's Mezzanine Investment and Debt Capital Markets Underwriting Committees. Prior to joining RBC Capital Markets, Kencel served as Co-Head of Indosuez Capital, a middle market merchant banking and asset management business. During his over 25-year career, Kencel has had a broad range of experience in middle market leveraged finance, having been a founder of the high yield finance businesses at both Chase Securities Inc. (now JP Morgan) and SBC Warburg Inc. (now UBS). He serves on the Board of Advisors and is an Adjunct Professor at the McDonough School of Business at Georgetown University. Kencel received his B.S. in Business Administration, magna cum laude, from Georgetown University and his J.D. from Northwestern University School of Law.

Matthew Natcharian is Managing Director and Head of Structured Credit Investment Team at Babson Capital Management. He is responsible for structured credit investments primarily in collateralized loan obligations. Natcharian has over 17 years of industry experience, was a founding member of the structured credit team and was named head in 2005. Prior to joining Babson Capital in 1995, he served as a financial information analyst at Allmerica Financial. He is also a Director of Invicta Capital LLC. Natcharian holds a B.S. from Bentley College and is a member of the CFA Institute.

(Moderator) Staci Warden is the Executive Director of the Center for Financial Markets at the Milken Institute, where she leads initiatives on strengthening capital markets, access to capital, financial education and financial-markets solutions, among others. Warden is chair of the Rwandan Capital Markets Authority. Prior to joining the Milken Institute, she spent six years with JPMorgan in London, where she ran JPMorgan's Central Bank client franchise in Europe, Eurasia and Africa, and two years in New York as part of the sovereign-debt-restructuring deal team. Before joining JPMorgan, she was a director at the Nasdaq, where she led their two initiatives for micro-cap companies, the BBX and the OTCBB. Warden holds a master's of public policy from the Kennedy School of Government at Harvard University, with a concentration in international trade and finance, and has completed her coursework for a Ph.D. in economics from Brandeis University.

For more information, please contact: Dianna Dunne, Director of Government Affairs, Milken Institute at