<Bloomberg’s Katya Kazakina surveyed the horizon of art loan providers to find out what is happening in today’s uncertain market climate. Asher Edelman says art is for sale privately at a 20% liquidity discount:
- “I think there’s a big fear factor out there,” said Edelman, a former Wall Street investor and the founder of art- financing company Art Assure Ltd. “People are afraid of what’s going on in the world and they want to take some cash out of their art.”
Using art as store of value is to be expected at times when financial instruments become divorced from their underlying value drivers. But art is increasingly being leveraged to avoid selling losing positions:
- “Whenever you have stock price declines, you do get a lot of margin calls, and people look for any form of liquidity that they can find,” said Brian Jacobsen, chief portfolio strategist at Wells Fargo Advantage Funds in Menomonee Falls, Wisconsin.
Others seem to be looking for opportunities in the markets:
- “In the last three months, we’ve seen an increase in new clients who want to use art as collateral for loans,” said Suzanne Gyorgy, director of art advisory and finance services at Citibank’s private-banking unit. “They anticipate market volatility and want to have liquidity available for investment opportunities.”
Finally, there are those who simply want to shore up their cash positions:
- Art Finance Partners, a private New York firm that also lends money using art as collateral, saw a sharp rise in inquiries this month, according to partner Meghan Carleton. “People need to figure out where their sources of capital may be coming from in the next 30 to 60 days,” she said. “It’s about short-term liquidity.”