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Macquarie Become Kings of Junk

Christopher Joye

Coolabah Capital

In The AFR I publish a detailed feature that reveals Macquarie has become a major global player in "high yield" or "junk" loans---spending more than $30 billion on the sector---that have blown-out its overall default rates to a staggering five times the major banks' levels. Macquarie established its specialist junk loan investment unit, called Corporate and Asset Finance (CAF), after it had raised more government-guaranteed money ($25 billion) more quickly than any other Australian bank by May 2009. Nicholas Moore and his protege, Ben "Brains" Brazil, decided that the best way to cover the cost of this debt and the guarantee was to reinvest the cash in high yield loans, which they have successfully done ever since. CAF has grown to become one of Macquarie's most important businesses, accounting for more than one quarter of its profits in 2015. The downside has been a huge increase in Macquarie's default rates across its corporate and residential loans, which are now 4-5 times the level of the majors. Read free here (VIEW LINK)

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Christopher Joye
Portfolio Manager & Chief Investment Officer
Coolabah Capital

Chris co-founded Coolabah in 2011, which today runs $7 billion with a team of 33 executives focussed on generating credit alpha from mispricings across fixed-income markets. In 2019, Chris was selected as one of FE fundinfo’s Top 10 “Alpha...

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