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Podcast

How Asset-Based Lending Really Works with Marc Sole

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This week’s episode of Industry Insights: Exclusive Interviews examines the mechanics and evolution of asset-based lending through an in-depth conversation with Marc Sole, Deputy CIO and Portfolio Manager at Sound Point Capital. The discussion explores why ABL has moved from niche strategy to mainstream private credit focus, the operational differences from traditional direct lending, and the strategic considerations driving institutional adoption.

The ABL Evolution and Market Dynamics

Julie Miecamp opens by contextualizing asset-based lending’s transformation from specialized financing to a cornerstone of private credit portfolios. Recent high-profile bankruptcies and fraud allegations have intensified scrutiny on ABL structures, making operational understanding critical for market participants.

The conversation establishes why ABL mechanics matter beyond academic interest. As traditional bank lending continues migrating to private credit markets, institutional investors require deeper comprehension of collateral-based financing structures, risk assessment methodologies, and recovery mechanisms that distinguish ABL from conventional direct lending approaches.

Marc Sole, Deputy CIO and Portfolio Manager of Sound Point’s Capital Solutions Strategy and Tactical Loan Opportunity Strategy, joins hosts Julie Miecamp and Dayna Fields to examine the structural elements that define modern asset-based lending and its role in diversified credit portfolios.

Operational Mechanics and Risk Framework

The discussion transitions to the technical aspects of ABL execution, covering collateral evaluation, advance rates, and monitoring requirements that differentiate asset-based structures from traditional cash flow lending. Marc explains how Sound Point approaches due diligence on underlying assets, from inventory and receivables to more complex collateral types.

Key operational considerations include:

  • Asset valuation methodologies and frequency requirements
  • Borrowing base calculations and advance rate determinations
  • Field examination protocols and third-party verification processes
  • Covenant structures tailored to asset-based lending dynamics

The conversation addresses how ABL structures respond to market volatility, particularly regarding collateral value fluctuations and the mechanisms lenders employ to maintain appropriate risk-adjusted returns throughout economic cycles.

Strategic Portfolio Integration

The episode concludes with Marc’s perspective on how asset-based lending fits within broader private credit allocation strategies. The discussion covers portfolio construction considerations, including how ABL complements traditional direct lending, mezzanine financing, and other alternative credit strategies.

Marc addresses the scalability challenges facing ABL managers, the operational infrastructure requirements for effective asset monitoring, and the competitive dynamics shaping pricing and terms in the current market environment. The conversation touches on emerging trends in ABL, including technology-enabled monitoring systems and evolving collateral types that reflect changing business models.

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Produced and edited by Tanya Hubbard.

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