Manulife CQS touts double-digit SRT returns in US$1 billion pitch

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Its CQS RCR IV fund will invest in deals linked to bank lending in Europe, North America and Asia Photo by Roberto Machado Noa/LightRocket via Getty ImagesTHIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountThe firm is seeking around US$1 billion for the fourth iteration of its CQS Regulatory Capital Relief Fund, according to people familiar with the matter. The fund, which uses debt to boost performance, is targeting an internal rate of return of about 13 per cent, compared to over 11 per cent achieved by the previous vintage as of the end of the first quarter, they said, asking not to be identified because the matter is private.SRTs are booming as banks primarily in Europe and North America expand their use of the instruments to offload risk on loan portfolios to investors, freeing up regulatory capital that can then be used to back new lending or shareholder payouts.Breaking business news, incisive views, must-reads and market signals. Weekdays by 9 a.m.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Posthaste will soon be in your inbox.We encountered an issue signing you up. Please try againSales in the first half of 2026 surpassed US$18 billion, compared to about US$15 billion a year earlier, and are on track for a sixth straight annual record, according to estimates by Crescent Capital Group LP, which also invests in the instruments. Demand remains strong despite concerns that inflation, the debt-fuelled AI boom, and slumping government bonds could lead to greater credit risks for banks.MCQS has been investing in SRTs for more than a decade. Its CQS RCR IV fund will invest in deals linked to bank lending in Europe, North America and Asia, according to the people.It will likely be mostly deployed in SRTs tied to corporate loans but may also buy other assets such as transactions linked to project financing, they said, adding that annualized credit losses absorbed by SRTs held in the first three iterations of the fund have been below 0.2 per cent.Other investors that have recently raised, or are looking to raise, capital for SRT strategies include Toronto-based Polar Asset Management Partners Inc. and Crescent Capital. Last year, BNP Paribas SA’s AXA IM Alts raised US$2.5 billion to invest in the instruments and Jain Global LLC launched a fund focused on bank capital relief trades including SRTs.CQS RCR IV will be managed a team led by Wouter Van Assche, a senior portfolio manager at the alternative credit firm, the people said. A representative for Manulife CQS declined to comment.We apologize, but this video has failed to load.This advertisement has not loaded yet.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.