Skip to main content
MENU
Subscribe
  • Subscribe
  • Account
  • LOGIN
  • Topics
    • Alternatives
    • Consultants
    • Coronavirus
    • Courts
    • Defined Contribution
    • ESG
    • ETFs
    • Hedge Funds
    • Industry Voices
    • Investing
    • Money Management
    • Opinion
    • Partner Content
    • Pension Funds
    • Private Equity
    • Real Estate
    • Russia-Ukraine War
    • SECURE Act 2.0
    • Special Reports
    • White Papers
  • Rankings & Awards
    • 1,000 Largest Retirement Plans
    • Top-Performing Managers
    • Largest Money Managers
    • DC Money Managers
    • DC Record Keepers
    • Largest Hedge Fund Managers
    • World's Largest Retirement Funds
    • Best Places to Work in Money Management
    • Excellence & Innovation Awards
    • WPS Innovation Awards
    • Eddy Awards
  • ETFs
    • Latest ETF News
    • Fund Screener
    • Education Center
    • Equities
    • Fixed Income
    • Commodities
    • Actively Managed
    • Alternatives
    • ESG Rated
  • ESG
    • Latest ESG News
    • The Institutional Investor’s Guide to ESG Investing
    • ESG Sustainability - Gaining Momentum
    • Climate Change: The Inescapable Opportunity
    • Impact Investing
    • 2022 ESG Investing Conference
    • ESG Rated ETFs
  • Defined Contribution
    • Latest DC News
    • DC Money Manager Rankings
    • DC Record Keeper Rankings
    • Innovations in DC
    • Trends in DC: Focus on Retirement Income
    • 2022 Defined Contribution East Conference
    • 2022 DC Investment Lineup Conference
  • Searches & Hires
    • Latest Searches & Hires News
    • Searches & Hires Database
    • RFPs
  • Performance Data
    • P&I Research Center
    • Earnings Tracker
    • Endowment Returns Tracker
    • Corporate Pension Contribution Tracker
    • Pension Fund Returns Tracker
    • Pension Risk Transfer Database
    • Future of Investments Research Series
    • Charts & Infographics
    • Polls
  • Careers
  • Events
    • View All Conferences
    • View All Webinars
    • 2022 Retirement Income Conference
    • 2022 Managing Pension Risk & Liabilities
    • 2022 WorldPensionSummit
Breadcrumb
  1. Home
  2. PENSION FUNDS
September 09, 2019 02:17 PM

CPPIB extends private credit wager

Bloomberg
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print
    Bloomberg

    The Canada Pension Plan Investment Board is extending a push into private credit to fill a need for yield made scarce by low interest rates.

    The Canada Pension Plan Investment Board says it's extending a push into private credit to help fill a need for yield made scarce by low interest rates.

    The nation's biggest pension manager has increased its private debt investments from C$5.1 billion ($3.4 billion) in 2011, to C$32.7 billion at the end of March, its annual report shows. Investments in private credit were virtually zero in 2006. The growth of its allocations in less liquid assets has borne fruit, said its senior managing director and global head of credit investments John Graham.

    CPPIB, with more than C$400 billion of assets, is pushing further into private debt — where borrowers bypass traditional capital markets — to make up for dwindling yields elsewhere. With concerns about a new global economic slowdown causing interest rates to plunge, and about $15.6 trillion of global debt paying less than zero, it's increasingly urgent for portfolio managers to find new sources of returns. CPPIB has also boosted assets in private equity and real estate, and is looking further afield for gains, targeting growth in emerging markets and Asia.

    "Getting paid for the lack of liquidity is certainly something that we've been very successful at in the credit side," Mr. Graham said in an interview.

    Liquidity issues

    Graham currently oversees about C$40 billion in credit investments, with around 80% of that speculative grade. This includes corporate, real estate and structured deals.

    While it's benefited CPPIB, Graham is cognizant of the risks, as demand leads to a deterioration in deal terms. Investors could also get saddled with losses if credit conditions sour and they can't unload under-performing assets.

    "We're seeing less and less liquidity across the board, and in some of these markets I'm not sure if there is liquidity at all," he said. "Whether or not it's a big issue is going to be very institution specific."

    CPPIB returned 1.1% in the quarter ended June 30, as net assets grew C$8.6 billion to top C$400 billion for the first time. Pension funds invest in a variety of assets including low-risk government bonds. While that means they profit from fixed-income rallies, falling yields have also driven up future liabilities — threatening their ability to meet obligations.

    The Ontario Municipal Employees Retirement System is also planning to increase its private credit investments amid a push into private markets more broadly, Mark Redman, its global head of private equity, said in an interview. The C$97 billion pension fund currently allocates about 50% of its investments to non-public markets, he said.

    “You have to be more creative, private markets give more opportunities to add value,” he said. From a valuation perspective, these assets suffer less volatility, which means returns can be managed more effectively, he said.

    Middle market

    CPPIB remains bullish on the U.S. middle-market, where it invests through Antares Capital, which has about $24 billion in assets. Antares is prepared to swoop in to buy assets from cash-strapped lenders when the cycle turns, its CEO said in July.

    "We really do try to get deep diligence on every single deal," Mr. Graham said. CPPIB sees good opportunities to invest in companies that will survive a downturn in the credit cycle, he said.

    The credit team, numbering just under 100 employees in Toronto, New York, London and Hong Kong, is currently focused on growing in Asia and emerging markets. The fund is looking to grow particularly in China, India and Brazil. Emerging markets account for around 10% of the credit portfolio.

    "These are markets that are going to grow, they are going to be increasingly relevant in the global economy and it makes sense to spend time to build out capability and the infrastructure to invest," he said.

    Related Articles
    CPPIB invests in Freddie Mac supplemental loan program via Harbor Group International
    Court gives CPPIB control of Toronto toll road
    Canadian MP wants explanation of CPPIB's private prison divestment
    Recommended for You
    PRINT_180419916_AR_0_XLJYAJRGZSKN.jpg
    MassPRIM chief strategy officer departs
    close-up of japanese currency
    Japan's GPIF records 5.4% gain for fiscal year amid tumultuous markets
    Murphy_Phil_i.jpg
    New Jersey budget includes $6.8 billion pension contribution
    New SEC Rule on Fair Pricing Determination Needs Careful Consideration
    Sponsored Content: New SEC Rule on Fair Pricing Determination Needs Careful Consideration

    Reader Poll

    June 6, 2022
    SEE MORE POLLS >
    Sponsored
    White Papers
    Nearing the finish line: Ideas on end-state investing for corporate DB plans
    The Meaning of "Portfolio Intelligence"
    Credit Indices: Closing the Fixed Income Evolutionary Gap
    Forever in Style: Benchmarking with the Morningstar® Broad Style Indexes℠
    Crossroads: Politics, Inflation, & Bonds
    Is there a mid-cap gap in your DC plan?
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today
    July 4, 2022 page one

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    130 E. Randolph St.
    Suite 3200
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Content Solutions
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2022. Crain Communications, Inc. All Rights Reserved.
    • Topics
      • Alternatives
      • Consultants
      • Coronavirus
      • Courts
      • Defined Contribution
      • ESG
      • ETFs
      • Hedge Funds
      • Industry Voices
      • Investing
      • Money Management
      • Opinion
      • Partner Content
      • Pension Funds
      • Private Equity
      • Real Estate
      • Russia-Ukraine War
      • SECURE Act 2.0
      • Special Reports
      • White Papers
    • Rankings & Awards
      • 1,000 Largest Retirement Plans
      • Top-Performing Managers
      • Largest Money Managers
      • DC Money Managers
      • DC Record Keepers
      • Largest Hedge Fund Managers
      • World's Largest Retirement Funds
      • Best Places to Work in Money Management
      • Excellence & Innovation Awards
      • WPS Innovation Awards
      • Eddy Awards
    • ETFs
      • Latest ETF News
      • Fund Screener
      • Education Center
      • Equities
      • Fixed Income
      • Commodities
      • Actively Managed
      • Alternatives
      • ESG Rated
    • ESG
      • Latest ESG News
      • The Institutional Investor’s Guide to ESG Investing
      • ESG Sustainability - Gaining Momentum
      • Climate Change: The Inescapable Opportunity
      • Impact Investing
      • 2022 ESG Investing Conference
      • ESG Rated ETFs
    • Defined Contribution
      • Latest DC News
      • DC Money Manager Rankings
      • DC Record Keeper Rankings
      • Innovations in DC
      • Trends in DC: Focus on Retirement Income
      • 2022 Defined Contribution East Conference
      • 2022 DC Investment Lineup Conference
    • Searches & Hires
      • Latest Searches & Hires News
      • Searches & Hires Database
      • RFPs
    • Performance Data
      • P&I Research Center
      • Earnings Tracker
      • Endowment Returns Tracker
      • Corporate Pension Contribution Tracker
      • Pension Fund Returns Tracker
      • Pension Risk Transfer Database
      • Future of Investments Research Series
      • Charts & Infographics
      • Polls
    • Careers
    • Events
      • View All Conferences
      • View All Webinars
      • 2022 Retirement Income Conference
      • 2022 Managing Pension Risk & Liabilities
      • 2022 WorldPensionSummit