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Private debt sector - Facing the challenges together | Brochure


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Context

Debt and debt-like instruments have recently become the silk route of investment managers and so-called shadown banks. Deloitte can help make the most of the situation.

Key points

Luxembourg and Deloitte are helping credit and debt funds exploit investment opportunities in a prudent, efficient and, optionally, a lightly regulated way.

Why Luxembourg is leading the way

Private debt sector - Facing the challenges togetherWhether a fund is EU or non-EU, the choice of the gateway for distributing the fund to European investors is a key decision.

Now more than ever, Luxembourg offers a comprehensive product range for all players wishing to distribute their products across Europe and fully benefit from the newly introduced regulations (AIFM Directive, banking regulations, etc.).

Building on its track record, supportive environment for alternative industries and leading position as an alternative investment funds domicile, Luxembourg is increasingly trusted by investors and alternative players.

The bottom line is that Luxembourg tends to be the first choice of all lending market players who wish to leverage their potential through a stable platform for their investment strategies.

Value proposition

Deloitte is proud to offer a centralised team using state of the art technology for legal, tax and accounting setup and day-to-day administration: CDO Suite™ - The market-leading portfolio administration and compliance solution.

CDO Suite™ was designed for the portfolio management industry. The system brings the diverse perspectives of an agent, trustee, administrator, collateral manager and fund together in a single tool. The system’s flexibility allows users to monitor portfolio collateral and cash activity, from cash reconciliation to hypothetical trades, collateral administration to portfolio reporting.

Setup of the structure

  • Setup of a tax efficient fund structure, including investment vehicles (if applicable)
  • Assistance on the design of flexible strategies for the management of financial flows and the distribution of investment returns to the investors
  • Tax and accounting advice on the implementation of financing instruments

Loan administration

  • Loan management (Performing or Non Performing): calculation, monitoring and accounting of
    • loan cash interest and PIK interest (if any)
    • loan principal amortisation or pay down
    • loan redemption
    • penalties and fees
  • Anticipated interest rate reset
  • Covenants monitoring
  • Interest advice letter preparation including interest rate, period, days, calculation base, principal amount, interest rates, margin, interest due, unpaid interest, PIK interest, cash interest and communication with the borrowers
  • Loan portfolio reporting
  • Monitoring and reconciliation with the appointed loan agent or servicer notification (if any) and the accounted interest income

Cash flow management

  • Monitoring and management of bank accounts including follow-up of cash receipts from loan interest and other income and preparation of wire instructions
  • Closely monitored bank signatory control
  • Monthly bank account reconciliations
  • Waterfall computation and review
  • Distribution or dividend computation and proposal

Process design and valuation

  • Understanding or review regarding the transaction documents
  • Setting timelines, agreeing details, on-going review of loan
  • Quarterly or monthly operational review
  • Following the appropriate valuation model and simulating fair value

Core solutions

  • Accounting, valuation and impairment calculation in relevant GAAP
  • IRR and carried interest calculations
  • Multi-currency drawdowns and distributions
  • Production and distribution and monitoring of drawdown letters with funds received
  • Monitoring of drawdowns with agreed commitment
  • Reconciliation of investment manager’s records
  • Equalisation provision calculation
  • Impairment test and valuation calculation

Private debt sector - Facing the challenges together

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