Sunday, April 2, 2006

Hedge Funds Companies Give Payday Loan Lenders a Hand

By J.J. Cameron
Payday Loan Writer

Numerous companies in need of financing have turned to a specific group of investors who are both flush with cash to provide whem with assistance: the nation’s hedge funds and their more than $1 trillion in assets. Many of these 8,000 or so funds have been eating their way up the lending food chain and are becoming increasingly powerful forces in U.S. debt markets.

Payday loan lenders have benefitted from these investments.

Hedge funds are providing loans for everything from small outfits, like payday advance companies and start-up technology firms, to large automotive companies, airlines, and retailers. They are snapping up securitized loan bundles tailored to sate their appetite for risk, scooping up higher-risk loans on the open market, and swooping in to provide companies with bailout funds.

“These guys have a ton of cash on their hands, and they are trying desperately to put it to work,” explains Rob Polenberg, an associate director with Standard & Poor’s. He adds that hedge fund participation in the debt markets “has just become huge.”

Some hedge fund companies, like Ritchie Capital Management, have formed new divisions that focus only on direct lending. Bill DeMars, who heads the Ritchie Technology & Life Sciences Finance Division, says that hedge funds are attracted to such loans because they help diversify their investments, have had low default rates, and offer “double digit” yields.

One Response to “Hedge Funds Companies Give Payday Loan Lenders a Hand”

  1. Payday Loan Times » Blog Archive » During Financial Literacy Month, California Residents will Learn about Payday Loan Lending Says:

    […] During California Financial Literacy Month, DFI and DOC will be involved in events and activities to highlight such financial literacy themes as savings and investment, fraud and financial abuse, credit and payday loan lending, and financial readiness. […]

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