High Yield Bonds can offer substantial coupons when appropriately selected.

High yield bonds are debt securities issued by sub-investment grade rated borrowers and usually pay a fixed rate of interest. Typically they will be unsecured and in the event of a default or liquidation, investors in a high yield bond will rank behind all secured lenders. They will be repaid out of whatever liquidation proceeds remain after all the secured lenders have been repaid in full. As a result, high yield bonds will typically achieve lower levels of recovery than secured debt following default or liquidation.

However, in the last few years, issuance of senior secured high yield bonds has gained popularity. A senior secured high yield bond shares in the same security pool as a senior secured loan and for that reason is expected to achieve similar levels of recovery. Some of these bonds have been structured to pay a floating rate of interest – such bonds are referred to as “senior secured floating rate notes”. High yield bonds offer investors a higher duration asset than a Secured Loan paying a higher coupon and are securities that are easily transferrable through established clearing systems.

Retail Leasing and Re-development

In a competitive retail market we have the flexibility to keep our rents low, our tenants happy, and our properties full. Acquiring only well-located real estate, Dexau Enterprise’s goal is to re-invent each property by bringing in new tenants to the community and implementing capital improvements such as upgraded façades, signage, architectural details, and any necessary upgrades to the roof, parking lot and HVAC systems. Dexau places the highest priority on ensuring that each project offers an attractive, inviting, and clean appearance for our tenants’ customers.

We have significant experience with properties that have been under-performing due to lack of leasing and management expertise. In these situations, we closely review the property’s condition and market position and then design a plan that may include a combination of redefining, repositioning, and reintroduction of the asset. By focusing our efforts on specific locations, Dexau maintains a deep knowledge of each region allowing us to execute turnarounds quickly and cost effectively. We are a positive force a caring and committed partner – in each community where we do business. We work hard to create a successful tenant mix, including food, service, and merchant shops, to enable each of our properties to meet the needs of the immediate market. We recognize the need for balance and diversity, and are pleased to have a combination of national chain tenants, local chains, and “mom and pops” comprising our portfolio.

Through proactive and carefully planned re-development, Dexau Enterprise is able to provide a viable shopping destination for the community and a valuable addition to our investment portfolio.

Dexau Enterprise strategic approach

Direct lending

The middle market is a large contributor to GDP and employment, where private-sector funded lending will complement the traditional bank financing market. Dexau can arrange a flexible financing package for middle market borrowers, provide the capital and develop a close relationship with the management of the borrower. Compared with secured debt, lending directly to the middle market provides investors with access to attractive returns across the capital structure and more control over terms of the financing package.

Special Situations strategies aim to offer a high return without a corresponding increase in risk. Our Special Situations strategy aims to generate attractive risk-adjusted returns by investing in stressed, distressed and new money financing opportunities. We employ a multi-strategy approach, capitalising on cases where there is temporary credit market dislocation, where good companies are in need of balance sheet restructuring or where traditional sources of financing are no longer available to those same companies. We seek to deliver attractive absolute and risk-adjusted returns via a combination of capital appreciation and current income by investing predominantly in senior secured corporate debt.

The strategy overlays the product expertise of a dedicated, specialist investment team with Dexaus’s extensive knowledge of the issuer universe and sponsor relationships in global credit markets. New issue leverage, contractual terms and yields all indicate a credit market that has reached its cyclical peak. Going forward we expect to see persistently high market volatility and an expansion of the opportunity set driven by elevated geopolitical risks, a slowdown of macro-economic performance and challenges to individual business models and sectors. Long-only and alternative investment strategies are combined to deliver holistic solutions designed to capture the most attractive, timely opportunities within global sub-investment grade debt.

Secured loans

Secured Loans are sub-investment grade corporate debt instruments that are secured against the assets of the borrower. Because of this, Secured Loans are expected to offer a higher recovery rate in the event of default than unsecured obligations like High Yield Bonds. Loan investors can also receive the benefit of legal covenants that provide some controls and restrictions over borrowers in the event of weaker performance.

Secured Loans offer a floating rate of income, with a fixed margin above underlying reference rates, giving protection in a rising interest rate environment and less duration risk than fixed rate assets. In most cases, loans will also have protection in a negative interest rate environment, through an interest rate “floor”, which results in loans receiving a minimum base rate of zero even if underlying base rates are negative. Due to their position in the capital structure Secured Loans typically display lower secondary market price volatility than High Yield Bonds.