NETHERLANDS - PGGM has confirmed it is looking into further Collaterised Loan Obligations (CLOs), but only with ABN AMRO at present, after the two concluded a deal worth around €15.5bn last month.
“We are enthusiastic about the ABN ANMRO deal, and we are looking at further options with them,” said Ellen Habermehl, PGGM spokesperson. “Maybe we will put more money into such a deal, but for the moment we are only looking at [doing so with] ABN AMRO.”
ABN AMRO announced in December it would sell part of the credit risk on its loan book to PGGM using a CLO structure, and Hugh Scott-Barrett, CFO at the asset manager, stressed the deal could be the first of a number of strategic steps in the firm’s capital management.
“PGGM is our trusted partner with whom we have worked for many years... and we expect to conduct a number of transactions that will offer opportunities for both of us.”
Piet Roelandt, director of portfolio management at PGGM, said the deal would allow the €74.4bn fund to gain access to an asset class that was efficient from a risk-return perspective and had the additional benefit of further diversifying its asset allocation.
“This is an effective way of investing in a loan market which thus far has been difficult to access through the public markets, in a size that is meaningful for PGGM. This deal helps to achieve our goal of having a better diversified overall portfolio,” said Roelandt, who added that being closely involved in the structuring of the transaction allowed the fund to optimise those effects.
Michael Schlachter, managing director at Wilshire Associates in the US, commented: “I have seen a couple of funds explore CLOs, but no investments yet. CLOs introduce leverage, so I would think plans utilising CLOs would get more than just exposure to bank debt.”
In other news, PGGM announced it was still locked in talks over whether or not it would set up a separate co-operative entity to administer the fund.
Habermehl at PGGM said the fund had left the debate “as open as possible” in order to avoid placing too much pressure on the board of governors. She added that any decisions as to how it would affect the fund’s structure going forward had yet to be addressed.
The Pensions and Lifetime Savings Association (PLSA) has announced it will shrink its board by more than one-third as part of a governance overhaul to make it "agile and more appropriate".
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