Please upgrade your browser

We take your security very seriously. In order to protect you and our systems, we are making changes to all HSBC websites that means some of the oldest web browser versions will no longer be able to access these sites. Generally, the latest versions of a browser (like Edge, Chrome, Safari, etc.) and an operating system family (like Microsoft Windows, MacOS) have the most up-to-date security features.

If you are seeing this message, we have detected that you are using an older, unsupported browser.

Alternative Credit

HSBC Global Asset Management is well positioned in the alternative credit space with over 25 years of alternatives manager selection and allocation expertise with USD43.2 billion of assets under management, advise and oversight¹. We provide you access to leading specialist alternative credit and direct lending managers across the globe.

1. Source: HSBC Alternative Investments Limited, as of 31 December 2019. Includes USD6.4 billion from committed capital (“dry powder”) in hedge funds, private equity and infrastructure debt.

Why Alternative Credit?

	Fixed Income Alternative ◆ Offers advantages in the current low yield environment with potential for interest rate rises; avoids constraints of a fixed rate		Floating Rate ◆ Potential to achieve better returns than fixed income opportunities, with a similar or more conservative risk profile
	Obtaining potential Cash Yield through Private Credit ◆ Private Credit can offer potential consistent cash yield¹ due to the illiquidity premium, obtained via first-lien or unitranche loans² that are senior in the capital structure		Combining Private Credit and Syndicated Loans ◆ Syndicated Loans provide immediate market exposure as the Private Credit book builds up; potential for higher returns in Private Credit through restructuring and prepayment fees
	Experienced Global Managers ◆ A single solution offering access to four globally experienced managers with strong records of investing across loan markets		Regulatory Change ◆ Capture the shift towards alternative lenders due to regulatory changes affecting traditional lenders

For illustrative purposes only. Forecasts, forward-looking statements, views and opinions are subject to change without notice, are by their nature, subject to significant risks and uncertainties, and are not a reliable indicator of future performance. There can be no assurance that the investment strategy discussed above meets its targeted returns, diversification or asset allocations. Diversification does not ensure a profit or protect against a loss. Capital distributions cannot be guaranteed.
Source: HSBC Alternative Investments Limited. January 2020.
1. Distributions cannot be guaranteed and will be a function of the speed and size of investment within the Syndicated Loan and Private Credit portfolios.
2. Unitranche loans combine senior and subordinated debt into one debt instrument. The borrower will pay one blended interest rate to just one lender.

What is HSBC Diversified Loan strategy?

It is an alternative credit strategy investing in credit markets through a diversified global portfolio of senior, secured debt targeting mid-to-high annualized net returns.

What are the key characteristics of HSBC Diversified Loan strategy?

	How it works ◆ The strategy normally provides 100 per cent drawdown on day 1 into Syndicated Loans which is then gradually invested into Private Credit over the course of three years ◆ It is expected that the peak exposure to Private Credit reaches 90 per cent once the Private Credit Strategy is fully deployed by year 3		Risk Return Profile ◆ Senior secured debt has historically shown resilience through cycles superior to high yield or unsecured debt with better default and recoveries historically ◆ Illiquidity premium of private credit allows for potential higher yield, upfront fees, and lower default risk than liquid credit ◆ Potentially low volatility return stream as a result of the stability derived from private credit valuations
	Expertise ◆ Advised by HSBC Alternative Investments Limited (HAIL) - one of the largest global alternative investment advisers and managers ◆ HAIL reviews over 50 groups to select suitable partners for the portfolio at favourable fees and economics given HAIL’s scale of commitments ◆ Portfolio created through bespoke mandates available only to the selected institutional investors		HAIL’s initial and ongoing due diligence ◆ All managers have been subjected to HAIL’s rigorous due diligence process, refined over a 25+ year history ◆ HAIL will maintain regular contact with the managers, once invested
	Manager and strategy diversification ◆ The strategy offers bespoke exposure to 4 selected managers¹, operating across 2 strategies – private credit and syndicated loans ◆ Due to the senior exposure to the capital structure, we believe the strategy combination can offer the potential for strong diversification within a wider fixed income portfolio		Competitive fee basis ◆ Combines 4 private credit and syndicated loan managers to form a single, cost effective global loan solution ◆ Fees are expected to be lower than if exposure was obtained through a similar portfolio of individual manager funds
	Reporting ◆ HAIL will provide one quarterly report, combining commentary and performance information from each of the 4 managers

For illustrative purposes only. Past performance is not a reliable indicator of future performance. Forecasts, forward-looking statements, views and opinions are subject to change without notice, are by their nature, subject to significant risks and uncertainties, and are not a reliable indicator of future performance. There can be no assurance that the investment strategy discussed above meets its targeted returns, diversification or asset allocations. Diversification does not ensure a profit or protect against a loss. Capital distributions cannot be guaranteed.
Source: HSBC Alternative Investments Limited. January 2020.
1. Reflects views of HSBC Alternative Investments Limited.

Key risks

The value of investments and any income from them can go down as well as up and investors may not get back the amount originally invested.

◆ Liquidity: there is no guarantee of distributions and no established secondary market
◆ Long term horizon: investors should expect to be locked-in for the full term of the investment, which is subject to extensions
◆ No capital protection: investors may lose the entirety of invested capital
◆ Unpredictable cashflows: capital may be called and distributed at short notice
◆ Economic conditions: ability to realise/divest from existing investments depends on market conditions and the regulatory environment
◆ Risk of forfeiture: failure to make call payments could result in forfeiture of commitment, including invested capital, without compensation
◆ Default risk: in the event of default investors risk losing their entire remaining interest in the vehicle and may be subject to legal proceedings to recover unfunded commitments
◆ Reliance on third-party management teams: underlying investments will be managed by various different third-party management teams that will in aggregate determine the eventual returns for the investor

The risk factors listed above are not exhaustive. Please refer to the official product documentation for the detailed risk disclosures specific to each private credit investment opportunity. This page is prepared for general information purposes only and does not have any regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive it. Any views and opinions expressed are subject to change without notice. This page does not constitute an offering document and should not be construed as a recommendation, an offer to sell or the solicitation of an offer to purchase or subscribe to any investment. Any forecast, projection or target where provided is indicative only and is not guaranteed in any way. HSBC Global Asset Management (Hong Kong) Limited (“AMHK”) accepts no liability for any failure to meet such forecast, projection or target.

Risk Warning

Alternative investments may not be suitable for all clients. As with any investment, the value and any income from them can go down as well as up and you may not get back the amount originally invested. However, these products can be highly speculative; more volatile; less liquid and are generally intended for experienced and financially sophisticated investors who are willing to bear the risks associated with such investments.

Alternative Credit