Rebecca Fine, the chief executive of Athena Art Finance, thinks that ‘overall, the art market has demonstrated low correlation with other asset classes’ and tends to hold up in times of economic turmoil, acting as a potential hedge against inflation. She adds: ‘Pure play art lenders, like Athena Art Finance, are looking at more than market trends. Unlike the banks, which lend against clients’ balance sheets, or the auction houses, which participate in the upside from art transactions, specialty art lenders are taking risks that are tied directly to the artworks, so we evaluate each work on its very specific qualities and merits.’
With rates at both private banks and asset-backed lenders consistently high however, should we be expecting a dip in demand for such products? Apparently not. There are reports that mid-to-high level galleries are using loans against stock to release liquidity within an increasingly tough climate, joining individual collectors who are looking at loans for reasons outside of financial necessity. Institutional investors are also said to be entering the field at pace, reportedly having rushed to Sotheby’s art-backed debt security and contributing to the auction house increasing its planned offering from USD 500 million to USD 700 million.
‘People often borrow for financial flexibility, not necessarily need. Many of our top clients have invested in long-term appreciating assets, rather than cash, and are looking to extract liquidity for opportunistic investments, to make more money,’ Milleisen says. Stewart concurs: ‘Our collectors and borrowers are often successful entrepreneurs from a variety of fields. For them, financing is something that they are very at ease with, and it is more a method of optimization, which is how they think of all their assets.’
