Babson Capital Management LLC, an investment manager with more than $186 billion in assets, hired Eric Lloyd and Terry Harris for its new Babson Capital Finance unit.
Lloyd joined as head of capital markets and Harris as head of portfolio management, according to Michael Hermsen, chief executive officer of the group, to whom both report.
Babson formed Babson Capital Finance to expand its origination and investments in middle market, senior and second-lien loans and subordinated debt. It consolidates the firm’s U.S. and European mezzanine and private-equity groups in Springfield, Massachusetts and London, a middle-market lending unit in Chicago, an energy-finance team in New York and an Asia-Pacific leveraged-finance group that has offices in Hong Kong and Sydney, Hermsen said.
“There is a hole to be filled, particularly in middle-market lending, because banks have been pulling out of credit in general, in the U.S., Europe and Asia,” Hermsen said in a telephone interview. “When we saw this vacuum created, we decided to become more aggressive and grow traditional areas more rapidly.”
Lloyd previously worked at Wells Fargo & Co. (WFC:US) where he was head of market and institutional risk, according to Hermsen. Harris was the co-founder of Certus Capital Partners.
Babson Capital Finance was set up with equity from parent company Massachusetts Mutual Life Insurance Co. as well as with a bank line of credit, Hermsen said. The group may also seek to raise collateralized loan obligations and issue bonds.
The U.S. middle-market lending group has completed nine loan transactions this year. Babson Capital Finance has also completed seven loan deals in Europe, five in Asia-Pacific and two by its energy-finance group, Hermsen said. Its units have also invested in about 24 mezzanine transactions.
There have been $839.7 billion of leveraged loans raised in the U.S. this year compared with $496.2 billion during the same period in 2012, according to data compiled by Bloomberg.
Leveraged loans are rated below BBB- by Standard & Poor’s and less than Baa3 at Moody’s Investors Service. (MCO:US)
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