Source: Principia Partners
Principia Partners, a leading provider of advanced end-to-end processing solutions for structured finance and capital markets, today announced the release of V5, its most comprehensive solution for managers and administrators of structured finance operations.
The latest release of Principia SFP (Structured Finance Platform) provides new product coverage and functionality. A new user interface and navigation scheme is designed to facilitate and automate the manually-intensive tasks associated with managing ABCP conduits, securities arbitrage conduits, structured investment vehicles (SIVs) and credit derivative product companies (CDPCs).
A significant part of the enhanced application was focused on developing a flexible structured finance operations framework. With broad coverage of first and second generation credit derivatives and structured credit instruments, Principia SFP meets the complex portfolio management and operational requirements of CDPCs. These highly-rated structured finance operating companies serve as counterparties to other financial institutions in credit default swaps or specialized insurance policies against credit events.
"CDPCs represent an important growing trend in the structured finance world, merging the best practices and economic benefits of credit derivatives and securitization," states Dr Douglas Long, EVP – Business Strategy at Principia. "It is an emerging market, and Principia delivers a solution that enables new entrants to quickly leverage first-to-market advantages." Industry analysts are predicting that CDPCs will quickly become a major component in the credit derivatives market. As clients, Principia has several CDPCs and credit investment managers employing similar techniques.
In order to obtain AAA-strength ratings, CDPCs are subject to intense scrutiny from rating agencies prior to their conception and throughout their continuing operation. Similar to other structured finance operating companies such as SIVs, CDPCs must regularly demonstrate compliance with a number of tests on its portfolio. These include asset composition, liability outstanding, capital adequacy, counterparty concentration, liquidity and market rate sensitivity tests.
"Principia SFP enables CDPCs to meet the rigorous demands of compliance reporting and accounting in an automated manner, flowing seamlessly from portfolio management and other front office activities," states Long. A strategic partnership with Markit, the leading provider of credit default swap data, further enhances Principia's automated credit derivatives trading and operations platform.
"Advances in credit arbitrage and structured credit products are occurring at an unprecedented pace, especially with the introduction of credit indices and structured finance indices," says Long. "Principia SFP V5 provides comprehensive coverage for a broad range of synthetic instruments, including single tranche CDOs, CDS on asset-backed securities (ABSs) in single-name and tranche formats, e.g. synthetic CDOs of ABS."