Haynes Boone Partner Jeff Nichols spoke with Hart Energy as asset-backed securitizations (ABS) have evolved from a niche strategy for refinancing into an increasingly useful source of capital for U.S. producers.
Nichols, chair of the Energy Practice Group, told Hart Energy that the investor base behind ABS structures—primarily pension funds and insurance companies—has turned the product into a highly competitive form of financing.
“There’s a lot more capital coming from these investors than from traditional means of financing, including banks and high yield [markets],” Nichols said. The rates that ABS issuers get can be “better than a syndicated bank credit agreement, and they’re attracted to the fact that there are no redeterminations (or) long-term debt.”
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