EFTA01196164.pdf

From: Vahe Stepanian < To: jeevaeation@gmaiLeom, Cc: Paul Morris , Nay Gupta Subject: Loan Fund [Cl Date: Thu, 10 Jul 2014 17:40:12 +0000 Inline-Images: unnamed; unnamed(1); unnamed(2); unnamed(3); unnamed(4) Classification: Confidential Jeffrey - following up on your conversation yesterday with Vinit. His team likes the below implementation of the loan deal. Buy $20mm ($10mm with cash + $10mm on margin) of the DWS Floating rate loan fund (Ticker: DFRTX) which is a $3.3bn institutional class mutual fund investing in senior 1st lien collateralised loans. It is managed by Deutsche. The terms of the leverage (which we would require DB credit approval for) indicatively are 50% LTV at 3mL+125bp. The purpose is to lever your return. We compared several funds and like this DWS fund in particular for the following reasons: 1. Performance - top third morningstar in 2008 when mkts tanked, 2009 when mkts recovered and 2010 when mkts went sideways. It currently yields just below 4% net of fees and has had an annualised yield over the past year of 3.5% to 4.25% depending on the NAV 2. Fees are middle of the pack at 82bp (range is 60-100bp) 3. Portfolio management team of two have 32y and 33y experience respectively. Both joined Deutsche in eight years ago. The key to performance is proper loan due diligence combined with market timing 4. Fund size is $3.3bn. This is a huge benefit. Unlike some funds they don't have to buy every loan that is issued and instead can be highly selective 5. Both entry and exit are at close of business NAV. i.e. zero entry or exit transaction costs 6. Daily liquidity where some other funds are 30/60/90days. Even in 2008 when all credit markets tanked and became this fund maintained daily liquidity. 7. Credit rating of loans held is presently approx. 35% BB and 60% single-B which are fine while defaults are low 8. Monthly income (as coupon) 9. US based fund BTW - US brokerage a/c margin lending regulations require that for the first 30days you'd need to put up the whole $20mm and after that borrow $10mm. Please let us know if you have questions. Thank you, Vahe 4, Vahe Stepanian Associate I Wealth Investment Coverage Deutsche Bank Securities Inc. Deutsche Asset & Wealth Management 345 Park Avenue - 26th Floor New York. NY 10154-0004 Tel. Fax Email All trade execution information contained herein is being provided as an accommodation at your request in advance of your receipt of the official trade confirmation(s). Additional trade detail information available upon request. The terms of the trade(s) may be subject to change prior to settlement. and therefore the EFTA01196164 official trade confirmation(s) and account statements issued by Deutsche Bank shall govern. Deutsche Bank is not responsible (or any discrepancy between the informal execution report and the official trade confirmation(s) or account statements. -- Forwarded by Nav Gupta/db/dbcom on 10/07/2014 17:08 --- From: To: • acationegmail.com. Cc: Dale: 09/07/2014 14:41 Subject: Re: Jeffrey - can we have a quick chat this am ? (C) Classification: Confidential Hi Jeffrey - looping in Nay and Paul. To recap: We will find a few funds, which we think have best performance characteristic and best fees for u. Loan Funds better than single loans as u don't need to bother booking single loans and servicing them. If we do decide to go bespoke best to do it in stage 2. just giving u broad characteristics of loan funds so that we are on the same page. 1) typical ratings for loans range between single B to BBB, the best loan funds concentrate on first lien collateralized senior loans 2) have daily NAV and MTM typically (to clarify these funds are not money market funds where price is par). Redemption liquidity ranges from daily to 90 days depending on fund. 3) spreads still around L + 3%-3.5%, duration close to zero as floating rate product. 4) size we are thinking is 10mm of cash from you, with 70% LTV so total size is 33mm levered right ? Vinit Vinit Sahni Managing Director I Global Head - Professional Client Group 8 Key Client Partners Capital Markets Group Deutsche Asset 8 Wealth Management 105/108 Old Broad St (Pinners Hall). EC2N 1EN London. United Kingdom Email My proposed ideas are being delivered to you by the DeAWM Key Client Partners ('KCP") London desk for discussion purposes only, and do not create any legally binding obligation on the part of Deutsche Bank AG and / or its affiliates ("DB"). These ideas are for the consideration of the intended recipients of this mail only. The KCP London desk does not provide investment advice. All intended recipients are Professional investors (as defined by MiFID). who understand the strategy. characteristics and risks associated with any ideas proposed herein and will be able to evaluate it independently. All trades on proposed ideas shall be subject to the relevant internal approvals prior to execution. Panto-I,*Perform. EFTA01196165 From: -Jeffrey E? leevacation@gmaitcom> To: Dale: 09/07/2014 11:59 Subject: Re: Jeffrey - can we have a quick chat this am ? (C) 340 775 8111 now? On Wed, Jul 9, 2014 at 6:49 AM, Vinit Sahni < wrote: Classification: Confidential Best Vinit Vinit Sahni Managing Director I Global Head - Professional Client Group & Key Client Partners Capital Markets Group Deutsche Asset 8 Wealth Management 105/108 Old Broad St (Pinners Hall). EC2N 1EN London. United Kingdom Tel. Email Any proposed ideas are being delivered to you by the DeAWM Key Client Partners ("KCP") London desk for discussion purposes only, and do not create any legally binding obligation on the part of Deutsche Bank AG and / or its affiliates ("D1r). These ideas are for the consideration of the intended recipients of this mail only. The KCP London desk does not provide investment advice. All intended recipients are Professional investors (as defined by MiFID), who understand the strategy, characteristics and risks associated with any ideas proposed herein and will be able to evaluate it independently. All trades on proposed ideas shall be subject to the relevant internal approvals prior to execution. Pagreitn,fr Peeftron This e-mail may contain confidential and/or privileged information. If you are not the intended recipient (or have received this e-mail in error) please notify the sender immediately and delete this e-mail. 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