DoubleLine Briefing: Investing in Data Center Asset-Backed Securities

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Oct 29, 2024, 10:05 ET

TAMPA, Fla., Oct. 29, 2024 /PRNewswire/ -- In a new research paper, Stephan Diaz Ellinghaus, a Specialist on DoubleLine's Asset-Backed Securities (ABS) team, and Client Portfolio Manager Phil Gioia, CFA, find in data center ABS "high-yielding investment opportunities with modest risk."

The paper, "Securitizing the Digital Present & Future: Investing in Data Center Asset-Backed Securities (ABS)," can be accessed here: https://doubleline.com/wp-content/uploads/Securitizing-the-Digital-Present-and-Future_October-2024.pdf

Data centers provide critical infrastructure, Messrs. Diaz and Gioia write, "to support the technologies that are now critical to people's everyday lives." These include emerging technologies such as machine learning, virtual reality, augmented reality and artificial intelligence as well as established ones, for example, email, messenger, streaming and social media.

Securitization, the authors note, is a rapidly growing avenue for the financing of data center assets. Primary-market issuance is "on track to hit record issuance in 2024, with more than $8 billion expected. The total data center ABS market outstanding could reach $50 billion by 2027, up from $25 billion in 2024."

DoubleLine, they write, is finding compelling opportunities in data center ABS throughout the capital structure. Subordinate and mezzanine tranches at present "offer the most attractive risk-adjusted return profiles. Like the senior tranches, the subordinate tranches are generally resilient to stress cases and benefit from the same industry dynamics and sticky client base and have more attractive spread and yield."

About the DoubleLine Asset-Backed Investment Team

The Asset-Backed Securities Investment team manages $5.2 billion in ABS investments as of the close of the third quarter 2024. Its seven members have worked together since 2013 and, among other professionals, call upon the additional support of 60 corporate and structured-products analysts and 21 risk analysts at DoubleLine. DoubleLine enjoys captive sourcing channels including securitizations of financings of data centers and other telecommunications infrastructure. The team has extensive experience in public and private ABS markets across the risk spectrum.

About DoubleLine

DoubleLine Capital LP is an investment adviser registered under the Investment Advisers Act of 1940. DoubleLine's offices can be reached by telephone at (813) 791-7333 or by email at [email protected]. Media can reach DoubleLine by email at [email protected]. DoubleLine^® is a registered trademark of DoubleLine Capital LP.

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SOURCE DoubleLine