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June 8, 2020

BlueBay expands its CLO capabilities

By Patrick Brusnahan

Specialist fixed income manager Bluebay Asset Management has taken on the US CLO Management business of its parent, Royal Bank of Canada.

It will be moved to BlueBay to be integrated with Bluebay’s own CLO management platform. Sid Chhabra, who joined the firm in 2018, will lead the project.

The US-based team consists of four individuals and $500m CLO in management.

Chhabra said: “The addition of Matt Maggio and team provides an exciting opportunity for us to step up our CLO franchise with experienced individuals and has accelerated our plans to manage US focused CLOs. The new additions also support BlueBay’s commitment to continuing to add new strategies and capabilities in liquid and illiquid fixed income.”

Michelle Neal, head of US FICC and global senior relationship management at RBC Capital Markets, added: “RBC’s Leverage Finance franchise continues to demonstrate strength across the value chain of loan activities as we deliver to clients through our originate-to-distribute model spanning underwriting, financing, structuring, distribution and secondary trade support. Moving our US CLO Management platform to BlueBay allows us to continue providing compelling investment solutions for clients sustainable at scale within our asset management complex, while remaining under the broader RBC umbrella.”

Royal Bank of Canada reported a 32% increase in its Wealth Management segment’s Q4 2019 income at $552.8m.

The Wealth Management segment posted an income of $133.4m in fourth quarter of 2018.

RBC attributed the $68.2m (14%) increase to the sale of BlueBay private debt business ($101.6m) and higher average fee-based client assets.

However, these were partly offset by lower net interest income due to lower spreads, primarily at City National Bank.

Increase in costs and higher variable compensation commensurate with revenue growth also resulted in lower net interest income.

For the full year, the Wealth Management segment recorded a 13% growth in earnings due to higher average fee-based client assets.

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