Press Release
Principia Delivers Market-Ready Standardized Compliance Reporting and
Accounting for Structured Investment Vehicles and Securities Arbitrage
Conduits
Jersey City, NJ – May 1, 2007 - Principia Partners, a leading solution provider for the management and administration of structured finance operations, has just released Principia SFP Version 5.1. The new release provides extensive standardized compliance reporting and accounting functionality for the rapidly expanding Structured Investment Vehicle (SIV) and Securities Arbitrage Conduit markets.
Despite tightening spreads in the structured finance securities market, SIVs and innovative SIV-like structures such as SIV-lites have enjoyed a recent boom, climbing above $300 Billion in outstanding notes in 2007. The number of SIVs expanded 30% in 2006 and is expected to achieve stronger growth in 2007. Additionally, many securities arbitrage conduits, driven largely by regulatory changes, are adopting SIV compliance practices to enhance their return on capital. The success of the SIV business model has greatly contributed to the convergence of structured finance technologies and methodologies.
“As market requirements and practices have become more standardized, we are able to package a complete SIV management solution that covers a wide range of compliance reporting and operational needs out of the box,” states Dr. Douglas Long, EVP - Business Strategy at Principia. Using an intuitive interface, SIV managers can select and edit the standard suite of compliance reports covering cash outflows, portfolio composition, liquidity, market risk and capital adequacy and stress tests. The packaged SIV chart of accounts accommodates a broad range of accounting treatments, requiring little or no customization.
The added functionality seamlessly integrates with Principia’s market-tested deal capture, portfolio management and risk capabilities. This continuous end-to-end processing is critical because SIVs do not require costly liquidity backup facilities to guarantee shortfalls in settling maturing liabilities. SIVs qualify for this capital efficient approach by marking their portfolios, testing cashflow adequacy and monitoring credit and market risks on a daily basis. Thus they require far more robust and analytic portfolio management capabilities than other less dynamic vehicles.
“To meet the stringent risk limits imposed by the ratings criteria, SIVs must be assured that analytics are consistent and no model noise (conflicts in valuations that can be created from disparate systems) can be tolerated,” states Long. “Furthermore, relying on lean operations teams typically much smaller than those in commercial banks, SIVs place a priority on supporting all assets, liabilities and derivatives on a single integrated platform focused on the specific requirements of advanced Structured Finance Operations. Principia SFP provides that comprehensive level of support.”
As a result of the heightened activity in this market, new and existing SIVs are focusing efforts to more diligently manage investment strategies and to reduce overall expenses. The new 5.1 release is designed to deliver comprehensive functionality and ease of implementation, increasing enterprise-wide efficiencies while reducing the technical barriers to entry into the SIV space. “Principia SFP is an end-to-end system that will enable managers to meet the challenges of cost reduction first during implementation and then on an ongoing basis by scaling with portfolio growth and driving all operational processing in an automated manner,” states Long.
SIVs are independent, bankruptcy-remote entities, often sponsored by large banks that capitalize on the arbitrage between the highly-rated investment grade securities that they purchase, such as asset-backed securities, and the shorter-term commercial paper and medium-term notes that they issue.
Principia’s latest release incorporates more than a decade of experience in providing industry expertise and innovative solutions to managers and administrators of SIVs.
About Principia Partners
Principia Partners is the leading software provider for the management and administration of structured finance and credit investment operations. Some of the largest investors in structured credit ABS, MBS and CDOs use Principia SFP as the operational backbone for their portfolios. It enables them to consistently manage, analyze and report on these investments and their associated liabilities and hedges. On a single platform, clients can perform the full range of portfolio management, cashflow and exposure analysis, compliance, risk reporting and accounting activities demanded by their business. Operational inefficiencies associated with using multiple spreadsheets and undedicated systems are reduced by integrating and streamlining these activities on a unified platform that addresses challenges unique to the management of structured finance operations.
Principia SFP’s powerful analytics and ability to interface with, combine and consistently apply deal, cashflow and performance data from the leading industry providers empowers managers to know and understand their investments. On an ongoing basis, users have the control to track, analyze and evaluate risk exposures at the deal, tranche or collateral level and gain a consolidated view of risk across any number of portfolios. The fully auditable operational environment provides the flexibility needed to adapt to changing management, regulatory and accounting mandates and ensure transparency is consistently delivered to investors at every stage of the portfolio lifecycle.
For 15 years, the platform has been used by global commercial banks, insurance companies and investment managers, as well as supporting off-balance sheet operations such as ABCP conduits.
Principia Partners is headquartered in New York, with a European office in the City of London and a technology center in Conshohocken, Pennsylvania.
For press information contact:
Ben Jarrold
Tel: + 44 (0) 20 7618 1370
Email: Jarrold@ppllc.com