Rebecca Fine, managing director of Athena Art Finance, believes that “the art market as a whole has a low correlation with other asset classes” and tends to remain stable in times of economic turmoil, acting as a potential hedge against inflation. She adds: “Pure art lenders like Athena Art Finance look at more than just market trends. Unlike banks, which lend based on their clients’ balance sheets, or auction houses, which share in the profits from art transactions, specialist art lenders take risks that are directly linked to the artworks. Therefore, we value each work on its very specific qualities and merits.”
With private banks and asset-backed lenders offering consistently high interest rates, should we expect demand for such products to decline? Obviously not. There are reports that mid- to large-sized galleries are borrowing against inventory to free up liquidity in an increasingly difficult environment, joining private collectors seeking credit for reasons other than financial necessity. Institutional investors are also reported to be getting into the business in a big way, having pounced on Sotheby’s art-backed notes and helping the auction house increase its planned offering from $500 million to $700 million.
“People often borrow money to have financial flexibility, not necessarily because they need it. Many of our top clients have invested in long-term appreciation assets rather than cash and are looking for liquidity for opportunistic investments to make more money,” says Milleisen. Stewart agrees: “Our debt collectors and borrowers are often successful entrepreneurs from a variety of backgrounds. For them, financing is something they are very comfortable with, and it’s more of a method of optimization, that’s how they think about all of their assets.”
