(Bloomberg) -- In a small but lucrative corner of the market for structured credit products, boutique funds run by former Credit Suisse executives are making rapid inroads.
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Firms including ArtCap Strategies, co-founded by Antonio Navarro, and Enosis Capital, launched by Ramzi Issa, have negotiated key roles in two of the four so-called debt-for-nature swaps struck since October. ArtCap helped coordinate a $1 billion swap for El Salvador and is now in talks with about half a dozen governments in Latin America and Africa to advise on new transactions, Navarro said. And Enosis just advised on a $1 billion deal for Ecuador, with more in the pipeline, Issa said.
They’re vying for roles in deals that have attracted a number of Wall Street’s biggest banks. Firms that have completed debt swaps in recent months include JPMorgan Chase & Co. and Bank of America Corp. Though the market remains small, at just $4 billion, it’s estimated to grow to about $100 billion in the coming years.
Issa said that after holding senior structured credit positions at both Credit Suisse and UBS Group AG, his new setup at Enosis allows his small team to operate in ways that can be “more challenging in a larger institution.”
The swaps are finding favor with governments — typically junk-rated issuers — looking to refinance existing debt and put savings toward environmental projects. Deals are generally complex, bespoke and backed by multilateral development banks. Credit Suisse was the first commercial bank to bring in institutional investors back in 2021, and the bankers behind that work are now creating their own specialist funds.
ArtCap’s model is to originate and structure deals, and then bring in a large bank for the final stages of a transaction. Navarro said ArtCap advised El Salvador through the process of selecting a bank, which ultimately led to the government going with JPMorgan in its recent debt-for-nature swap.
A spokesperson for JPMorgan declined to comment. A representative for the government of El Salvador didn’t respond to a request for comment.
Bank of America, which handled the Ecuador deal on which Issa advised, is expecting the market to pick up. It’s gone from “an idea where people thought, this is so hard, it won’t get done, to two years later...there’s 10 or 11 deals announced,” BofA Chief Executive Officer Brian Moynihan said in a recent interview with the Financial Times.