In the latest ION Influencers Fireside Chat, host Giovanni Amodeo sat down with Charles Sorrentino, Head of Investment at Rithm Capital, to discuss the evolving landscape of asset-based finance (ABF) and emerging trends within structured credit. This engaging and informative session delved into market cycles, private credit growth, and the strategic advantages of scale in the real estate-backed credit sector.

Key Topics Discussed

1. Rithm Capital’s Evolution & Strategy

• Founded in 2013 under Fortress Investment and internalized in 2022.

• Currently manages a $40B balance sheet with $8B in capital.

• Specializes in structured products, with a focus on mortgage origination, residential transition lending, and alternative asset management.

2. Credit Market Cycles Post-GFC

• Sorrentino highlighted the credit cycles witnessed since the 2008 Global Financial Crisis.

• Emphasized the importance of historical performance data to model loss-adjusted returns and anticipate credit behaviors.

3. Why Structured Credit Still Matters

• Structured credit continues to offer tailored risk exposure and cash-on-cash returns.

• Serves as a critical tool for institutional investors seeking predictable yield and portfolio diversification.

4. Rise of Private Credit Providers

• Sorrentino expects increased participation in the ABF space.

• Key barriers to entry include:

  • Expertise in structured products

  • Access to asset originators

  • Reliable performance tracking and capital structure management

5. The Role of Scale in ABF

• While scale isn’t essential for every investor, it is crucial at the origination and servicing level.

• Larger platforms can drive better unit economics and operational efficiency, especially in mortgage and real estate credit markets.

Key timestamps:

00:08 Introduction to ION Influencers Fireside Chats
02:05 Market Cycles Post-GFC
03:37 Evolving Investor Education
05:31 Optimal Allocation in Asset-Based Finance
07:05 Deal Origination Strategies
09:17 Transparency in Asset Management
11:26 Correlation of Macroeconomic Events
14:29 Opportunities in the Housing Market
15:22 The Role of Banks in Asset-Based Finance
17:27 Growth Areas in Asset-Based Finance
19:10 Interest Rate Expectations and Yield
20:20 Team Dynamics and Required Skills
21:56 Evaluating Opportunities and Competitive Advantage
23:43 Private Credit Market Trends and Barriers
25:34 Importance of Scale in Asset Management