Principia Partners, a leading solution provider for the management and administration of structured finance operations, announced that Channel Capital Advisors LLP has licensed Principia SFP as the technology application and risk management software in its management of Channel Capital plc, a new Credit Derivative Product Company (CDPC). The system will manage transactions from deal capture and risk management through compliance reporting.
The CDPC will principally write credit protection on AAA rated tranches of portfolios of corporate and sovereign obligors. Channel Capital plc is expected to be extremely efficient even in current tight credit spread market conditions due to its use of a multiple-tranche capital structure, a low velocity business model, and other operational and structural enhancements of its business model.
âWe selected Principia because it provides strong operational capabilities in a proven framework that has been the backbone of various existing SIVs, CDPCs and structured finance operations,â states Walter Gontarek, Senior Partner and CEO of Channel Capital Advisors. âPrincipia will facilitate our ability to satisfy the technological requirements to expedite the successful launch of our platform and support on-going risk management requirements of the CDPC. In the long run, we anticipate it will help our business scale both in terms of an ever growing credit derivatives portfolio size and to exploit new asset class opportunities.â
Principiaâs operational processing platform is uniquely designed for structured finance institutions who are required to produce capital, liquidity and portfolio risk reporting on a regular basis to rating agencies. In order to continue receiving high counterparty credit ratings from those agencies, CDPCs are required to adhere to strict operating guidelines that define various aspects of operation ranging from types of credit transactions, portfolio composition and asset eligibility.
Gontarek goes on to say, âPrincipia also demonstrated a commitment to support the ever-expanding range of structured credit instruments. The software supports our eligible investments, liabilities and hedging derivatives as well as a complete range of first and second generation credit derivatives including single-name credit default swaps (CDS), basket swaps, CDS on structured finance securities and single-tranche CDOs.â
Principia SFP enables management and administration of single or multiple structured finance operations, on a single system. This includes; ABCP conduits, securities arbitrage conduits, structured investment vehicles, credit derivative product companies and guaranteed investment contract programs.
âChannelâs business model is a perfect example of how the structured finance market is converging and cross-breeding capital structures and technologies in order to deliver greater value to investors. We are delighted to be working with clients who can truly leverage the breadth and depth of our structured finance platform,â states Theresa Adams, CEO and Partner at Principia Partners.