Credit Group Progress Update - Jan 2024

Hi everyone

Spring is almost upon us. January passed so quickly! It’s time to update everyone on what has been happening with the Credit Group last month.

On the buyside, drawing on feedback from allocators, we have been focused on providing much needed frameworks on understanding the biggest asset classes and the pivotal asset allocation process. On the sellside, much work is being done with potential issuers about the process of deal origination and selection.

Below are highlights of key progress milestones for the month of Jan and context around their importance:

  1. Publication of Asset Primer Overview: US Mortgage-Backed Securities

US mortgage backed securities are the second largest asset class in the world. Given its liquidity and risk profile, it is rather surprising to see no discourse on the benefits and risks of allocating towards this asset.

We believe it is important to have a well balanced portfolio with a variety of maturities and assets that continue to provide predictable and fixed-income streams in a variety of rate environments.

This publication will give readers a jumping off point from which productive conversation about portfolio construction and diversification can happen.

  1. Publication of The Asset Allocation Process Overview

“You are not serious about RWA Tokenization if you don’t have an asset allocation process!"

Whether you are a stablecoin issuing protocol who need to prioritize liquidity and capital preservation or you are a project treasury that needs to target a specific return number to subsidize all or part of the operating expenses, asset allocation is pivotal in one’s asset management strategy.

However, it is very much missing from many project’s RWA strategies. This publication provides readers a high-level perspective on the steps and questions involved in this process.

Do get in touch if the topic is relevant to you or your project.

  1. Issuer Selection Process

Quality of deal origination and deal flow are central to onchain debt capital markets growth. Instead of an ad-hoc process, there needs to be a rigorous process by which the most qualified and impactful issuers are onboarded.

Given the nascent stage of the onchain debt capital market and the wide range of assets looking for financing, this process needs to be constantly updated. Much work was done with issuers to refine this important process.

The impact of these materials should scale with the maturation of the onchain capital market and asset management. Encouragingly we are hearing some of them being cited privately by other teams in the space in their conversations about RWA tokenization.

As the market evolves, there will be many exciting opportunities for the Credit Group to spearhead initiatives and support the Centrifuge ecosystem. This will be a continuous journey. If you want to be kept up to date with what we are working on. Keep an eye on the forum. More monthly updates ahead!