Managing an investment vehicle

• US 20050273429A1
• Filed: 06/06/2005
• Published: 12/08/2005
• Est. Priority Date: 06/04/2004
• Status: Active Grant

• Current Assignee: Black Diamond Capital Management LLC A Delaware Limited Liability Company
• Original Assignee: Black Diamond Capital Management LLC (SD Investments LLC)
• Inventors: Deckoff, Stephen H.
• Granted Patent: US 7,580,874 B2
• Time in Patent Office: Days
• US Class Current: 705/40
• CPC Class Codes: G06Q 20/102 Bill distribution or payments
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/03 Credit; Loans; Processing thereof
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange
• CPC Class Codes: G06Q 40/06 Asset management; Financial planning or analysis

Abstract

A method for managing an investment vehicle. The investment vehicle issues multiple debt instruments to a plurality of investors. The debt instruments have different liability characteristics. The proceeds of the debt instruments are invested in assets. From time to time, liabilities on the debt instruments and the credit quality of the assets is reevaluated, to ensure that the cash flows generated by the portfolio, disregarding fair market value of the assets, will be sufficient to pay timely principal and interest on the liabilities based on the evaluation criteria of two different rating agencies. In response to the reevaluating, the capital structure of the investment vehicle is adjusted to maintain a desired agency rating for the debt instruments.

Claims

1. A method for managing an investment vehicle, comprising the steps of:

investing the proceeds of multiple debt instruments in assets having associated credit ratings, the debt instruments being issued from the investment vehicle to a plurality of investors and having different liability characteristics;

from time to time, reevaluating liabilities on the debt instruments and the credit quality of the assets, to ensure that the cash flows generated by the portfolio, disregarding fair market value of the assets, will be sufficient to pay timely principal and interest on the liabilities based on evaluation criteria of two different rating agencies; and

in response to the reevaluating, adjusting the capital structure of the investment vehicle to maintain a desired agency rating for the debt instruments.

2. A method for managing an investment vehicle, comprising the steps of:

investing the proceeds of multiple debt instruments in assets having associated credit ratings, the debt instruments being issued from the investment vehicle to a plurality of investors and having different liability characteristics;

from time to time, reevaluating liabilities on the debt instruments and the credit quality of the assets, to ensure that the cash flows generated by the portfolio, disregarding fair market value of the assets, will be sufficient to pay timely principal and interest on the liabilities; and

in response to the reevaluating, adjusting the capital structure of the investment vehicle to maintain a desired agency rating for the debt instruments.

3. The method of claim 2, wherein reevaluating liabilities further comprises the steps of:

calculating estimated default rates for the debt instruments;

simulating default and interest-rate scenarios; and

determining a required capital structure for maintaining the desired agency rating.

4. The method of claim 2, wherein the debt instruments differ from each other in maturity date.

5. The method of claim 2, wherein the debt instruments differ from each other in issue date.

6. The method of claim 2, wherein the debt instruments differ from each other in payment seniority.

7. The method of claim 2, wherein the debt instruments differ from each other in agency rating.

8. The method of claim 2, wherein the reevaluation occurs on a periodic, fixed schedule.

9. The method of claim 8, wherein the periodic reevaluation is performed essentially each business day.

10. The method of claim 2, wherein the reevaluation is performed when a credit support aspect of the portfolio changes.

11. The method of claim 2, wherein the reevaluation is performed when new debt instruments are issued.

12. The method of claim 2, wherein the reevaluating of the liabilities is based on evaluation criteria of two different rating agencies.

13. A method for managing an investment vehicle, comprising the steps of:

investing the proceeds of multiple debt instruments in assets having associated credit ratings, the debt instruments being issued from an investment vehicle to a plurality of investors and having different liability characteristics;

from time to time, reevaluating liabilities on the debt instruments and the credit quality of the assets, to ensure that the cash flows generated by the portfolio will be sufficient to pay timely principal and interest on the liabilities based on evaluation criteria of two different rating agencies; and

in response to the reevaluating, adjusting the capital structure of the investment vehicle to maintain desired agency ratings for the debt instruments.

14. The method of claim 13, wherein reevaluating liabilities further comprises the steps of:

calculating estimated default rates for the debt instruments;

simulating default and interest-rate scenarios; and

determining a required capital structure for maintaining the desired agency rating.

15. The method of claim 13, wherein the debt instruments are issued through a public offering.

16. The method of claim 13, wherein the debt instruments are issued through a private placement.

17. The method of claim 16, wherein the debt instruments are issued through a private placement to qualified investors.

18. The method of claim 13, wherein the reevaluation occurs on a periodic, fixed schedule.

19. The method of claim 18, wherein the periodic reevaluation is performed essentially each business day.

20. The method of claim 13, wherein the reevaluation is performed when new debt instruments are issued.

21. The method of claim 13, wherein the reevaluation is performed when debt instruments are retired.

22. The method of claim 13, wherein the reevaluating of the liabilities disregards fair market value of the assets.

23. A method for investing, comprising the steps of:

purchasing at least one debt instrument from an investment vehicle;

wherein the investment vehicle;

invests the proceeds of multiple debt instruments in assets having associated credit ratings, the debt instruments being issued from an investment vehicle to a plurality of investors and having different liability characteristics;

from time to time, reevaluates liabilities on the debt instruments and the credit quality of the assets, to ensure that the cash flows generated by the portfolio, disregarding fair market value of the assets, will be sufficient to pay timely principal and interest on the liabilities; and

in response to the reevaluating, adjusts the capital structure of the investment vehicle to maintain a desired agency rating for the debt instruments; and

receiving a payment from the investment vehicle.

24. The method of claim 23, wherein reevaluating liabilities further comprises the steps of:

calculating estimated default rates for the debt instruments;

simulating default and interest-rate scenarios; and

determining a required capital structure for maintaining the desired agency rating.

25. The method of claim 23, wherein the debt instruments are issued through a public offering.

26. The method of claim 23, wherein the debt instruments are issued through a private placement.

27. The method of claim 26, wherein the debt instruments are issued through a private placement to qualified investors.

28. The method of claim 23, wherein the reevaluation occurs on a periodic, fixed schedule.

29. The method of claim 28, wherein the periodic reevaluation is performed essentially each business day.

30. The method of claim 23, wherein the reevaluation is performed when new debt instruments are issued.

31. The method of claim 23, wherein the reevaluation is performed when debt instruments are retired.

32. The method of claim 23, wherein the reevaluating of the liabilities is based on evaluation criteria of two different rating agencies.

33. A method for investing, comprising the steps of:

purchasing at least one debt instrument from an investment vehicle;

wherein the investment vehicle;

invests the proceeds of multiple debt instruments in assets having associated credit ratings, the debt instruments being issued from an investment vehicle to a plurality of investors and having different liability characteristics;

from time to time, reevaluates liabilities on the debt instruments and the credit quality of the assets, to ensure that the cash flows generated by the portfolio will be sufficient to pay timely principal and interest on the liabilities based on evaluation criteria of two different rating agencies; and

in response to the reevaluating, adjusts the capital structure of the investment vehicle to maintain desired agency ratings for the debt instruments; and

receiving a payment from the investment vehicle.

34. The method of claim 33, wherein reevaluating liabilities further comprises the steps of:

calculating estimated default rates for the debt instruments;

simulating default and interest-rate scenarios; and

determining a required capital structure for maintaining the desired agency rating.

35. The method of claim 33, wherein the debt instruments differ from each other in maturity date.

36. The method of claim 33, wherein the debt instruments differ from each other in issue date.

37. The method of claim 33, wherein the debt instruments differ from each other in payment seniority.

38. The method of claim 33, wherein the debt instruments differ from each other in agency rating.

39. The method of claim 33, wherein the reevaluation occurs on a periodic, fixed schedule.

40. The method of claim 39, wherein the periodic reevaluation is performed essentially each business day.

41. The method of claim 33, wherein the reevaluation is performed when a credit support aspect of the portfolio changes.

42. The method of claim 33, wherein the reevaluation is performed when new debt instruments are issued.

43. The method of claim 33, wherein the reevaluating of the liabilities disregards fair market value of the assets.