Foto: Bert Kaufmann
. Pioneer Investments ficha a John Black para dirigir el Desarrollo de Negocio Institucional en EE.UU.
Pioneer Investments announced that it has named John Black as Senior Vice President, Institutional Business Development Officer in the U.S. based in Boston. This is a new position.
“We’re building strong momentum in our institutional business and John will further strengthen our team,” said Bill Porter, Senior Vice President and Head of Institutional – North America. “We’re seeing increasing acceptance of our capabilities in the institutional market across a range of strategies. John has more than 20 years of experience within various segments of the institutional market and has developed a number of strong relationships over the course of his career that will be a welcome addition to Pioneer,” Porter added.
John is Pioneer’s second senior institutional sales hire this year. Michael Dirstine, who also has 20 years of experience in the institutional market, joined Pioneer in June.
Prior to joining Pioneer Investments, John was Senior Vice President, Institutional Sales at McKenzie Investments Corp. in Toronto, Ontario,where he worked closely with Consultant Relations to prioritize U.S. prospects and execute sales strategies. Prior to that, John was Vice President of Institutional Sales at State Street Global Advisors in Boston from 2007 to 2013 and Vice President of Institutional Brokerage Sales from 2004 to 2007. Before State Street, John was Vice President of Institutional Sales, Securities Lending and Prime Brokerage at Goldman Sachs in Boston and New York from 1997 to 2004. John holds a B.A. in Economics from Colby College. He is series 7 and 63 licensed.
Photo: Michelle Bachelet / Courtesy photo. Credit Quality in Chile Poised to Withstand Slow Economic Growth and Weak Commodity Prices
Chile’s (Aa3 stable) strong macroeconomic fundamentals, the sound credit fundamentals of its banks, and the market positions and access to funding for its rated non-financial companies will help the sovereign maintain its credit quality despite slowing growth stemming from domestic factors and a drop in global commodities prices, says Moody’s Investors Service.
Chile derives its fiscal strength, which ranks among the strongest of all sovereign issuers that Moody’s rates globally, from its low debt metrics and policy stability, according to the report “Credit Quality in Chile: Banking, Corporate Sectors Poised to Withstand Slow Growth, Policy Shifts.”
Contrary to market concerns, none of Chilean President Michelle Bachelet’s proposed policy changes appear likely to affect Chile’s main debt metrics, nor is the administration changing the country’s key macroeconomic and fiscal policies. The president has pursued an aggressive agenda including new taxes, changes to the education system, and possibly constitutional reform later in 2015, and both the pace and nature of the reforms have raised questions about a possible shift in Chile’s longstanding fiscal policy. Nevertheless, Chile’s growth through mid-2016 will be close to the median among its regional peers, with a low debt burden and among the strongest fiscal positions of any rated sovereign issuer worldwide. The administration believes the tax reform will increase government revenues by 2%-3% of GDP by 2018.
“While the record-low approval ratings of President Michelle Bachelet and her aggressive reform agenda threaten to upend the political stability that has dominated since Chile returned to democracy in 1989, neither will cause Chile’s debt burden to increase during President Bachelet’s term,” says Marianna Waltz, a Moody’s Managing Director. “Most of the proposed changes would be funded by increasing tax revenues, a credit benefit because it will not raise the country’s debt burden.”
Credit quality still fundamentally strong for Chile’s banks
The credit quality of Chile’s banks remains similarly strong as a result of their ample access to funding. The banks are increasingly using the local capital market to support loan growth.
Chile’s banks continue to exhibit sound credit fundamentals despite the country’s maturing investment cycle and softer domestic demand, as well as uncertainty caused by the new government’s reform agenda. Emerging political issues appear unlikely to have any direct effects on the performance of Chile’s banking system. While asset quality will likely deteriorate slightly amid economic uncertainty, the country’s banks have access to ample funding today.
“Delinquencies will rise slightly amid slow economic growth, but proactive management of credit growth, asset allocation and reserves will help limit problems with asset quality,” says Waltz. Chilean banks will continue to enjoy ample access to funding sources as the economy begins to strengthen.
Reforms and weak commodity prices reduce consumption and investments
Furthermore, Chile’s rated non-financial companies all have strong market positions and access to uncommitted local bank funding, and will maintain their good access to international sources, even if reduced investment makes it less necessary.
Chile’s slowing growth will strain profitability and demand through at least mid-2016 for domestic retailers, which rely on consumption, and weak commodities prices and rising production costs will constrain profitability for copper producer CODELCO in Chile’s crucial mining sector. But operating income for pulp producers Arauco and Inversiones CMPC will improve through at least mid-2016, partly from the peso’s depreciation and partly from increased volume from recent capacity additions and higher hardwood pulp prices.
Moody’s expects GDP growth to improve in 2015-16 despite the challenges of weaker investment this year.
Photo: Jeffrey Zeldman
. SL Green Acquires Eleven Madison Avenue in the Biggest Real Estate Deal in New York
SL Green Realty, New York City’s largest commercial property owner, announced that it has entered into a definitive agreement to acquire Eleven Madison Avenue in New York City for $2.285 billion plus approximately $300 million in costs associated with lease stipulated improvements to the property. The building is being sold by a joint venture of The Sapir Organization and CIM Group. The transaction is expected to close in the third quarter of 2015, subject to customary closing conditions.
Eleven Madison Avenue is a 29-story, 2.3 million square foot Class-A, Midtown South office property that was built in 1929 and originally served as the headquarters of Metropolitan Life Insurance Company. After a $700 million modernization in the 1990s, it became the North American headquarters of Credit Suisse, which continues to be the largest tenant in the building today. It also will serve as the new headquarters for Sony Corp. of America. The balance of the building is occupied by Yelp, Young & Rubicam, William Morris Endeavor Entertainment, and Fidelity Investments, along with the Eleven Madison Park restaurant, which earned Three Stars from the Michelin Guide
The property features an art-decodesign highlighted by an Alabama limestone exterior, elegantly appointed main lobby, state of the art building systems, and large floor plates. It is also on the National Register of Historic Places.
SL Green Co-Chief Investment Officer, Isaac Zion, commented, “Eleven Madison Avenue is one of the best assets in New York City’s vibrant Midtown South submarket, with floor-plate sizes, amenities, and a robust infrastructure that are truly unique to the area. Occupying a full block across from Madison Square Park, the building has direct connectivity to One Madison Avenue, a 1.2 million square foot building that is leased to Credit Suisse and also owned by SL Green.”
“After the past two years of repositioning the asset and value creation through leaseup and renovations, we are pleased to consummate this sale with SL Green”, said Alex Sapir, President of the Sapir Organization. “We trust that they will continue to own and operate this trophy asset in the same manner that we have over the past 12 years.”
The law firm of Greenberg Traurig, LLP represented SL Green. The seller was represented by Darcy Stacom and Bill Shanahan of CBRE, Inc. along with the law firm of DLA Piper (US).
Foto: Kevin Dooley. Completion of Flag Acquisition Establishes Aberdeen’s Investment Capabilities in Global Alternatives
Aberdeen Asset Management announced that it has completed the acquisition of FLAG Capital Management, a diversified private markets manager with offices in Stamford, CT, Boston, MA, and Hong Kong.
The acquisition, together with the previously announced purchase of SVG Capital’s stake in the joint venture Aberdeen SVG Private Equity Managers, sees Aberdeen join a small number of private equity managers with investment professionals on the ground in the world’s major markets. The combined team now has around 50 such professionals in the US, Europe and Asia.
Since inception, FLAG has raised over $7 billion of discretionary commitments from its broad client base. FLAG’s investments are focused on venture capital, small- to mid-cap private equity, and real assets in the US, as well as private equity in Asia.
These acquisitions are part of Aberdeen’s strategy to grow its alternatives business via multi-manager hedge funds, property and private market allocations, direct infrastructure investments and pan-alternative capabilities. A recent PWC report predicted total investment in alternative assets would nearly double to $15.3 trillion by 2020.
In addition to the acquisition of FLAG, Aberdeen announced on August 4, 2015 that it had entered into an agreement to acquire Arden Asset Management, a specialist hedge fund manager and adviser with offices in New York and London. Arden’s clients span corporate and state pension plans, sovereign wealth funds, global bank platforms and retail investors. The acquisition is expected to close by the end of 2015.
Following the completion of the Arden transaction, Aberdeen’s alternatives division, under Global Head of Alternatives Andrew McCaffery, will have $30 billion of assets under management.
Andrew McCaffery, Global Head of Alternatives at Aberdeen Asset Management, comments: “The acquisition of FLAG is very important for our alternatives business. Alternatives are becoming increasingly popular with investors who are seeking diversification. But to be a credible provider you
have to be able to compare markets and sectors globally and then drill down and understand what’s happening on the ground. This deal will help us meet that aim. We are now one of a handful of private equity investors with genuine local expertise in the US, Europe and Asia.”
Photo: Sonja. Cayman Islands is Confident of Being Granted AIFMD Passport
The Cayman Islands is confident that the pan-European marketing ‘passport’ will be extended to alternative investment funds (AIFs) set up in the jurisdiction, according to the Alternative Investment Management Association (AIMA), the global hedge fund industry association.
Cayman, where a high percentage of offshore hedge funds are registered, still awaits assessment by the European Securities and Markets Authority (ESMA). It was not included in the initial assessments which saw ESMA recommend the passport for Jersey, Guernsey and Switzerland under the Alternative Investment Fund Managers Directive (AIFMD).
But AIMA said that Cayman was well-placed to have a successful review in the near future.
Cayman has already entered into the requisite co-operation arrangements with the major EU investment securities regulators and the necessary tax information exchange agreements with EU governments as required by the AIFMD, AIMA said. In addition, the Cayman Islands Government has been developing an AIFMD compliant opt-in regime to ensure that the jurisdiction can continue to meet the needs of Cayman-based alternative investment fund managers who want to market funds into the EU under the passport.
AIMA said it was in the interests of institutional investors in Europe and hedge fund managers globally that Cayman be granted the passport.
Jack Inglis, CEO of AIMA, said: “The global industry as a whole needs Cayman AIFs to be approved under the AIFMD passport to ensure that pension funds and other European institutional investors can continue to benefit from investing in some of the world’s leading alternative investment funds. We are confident that Cayman will be granted the passport since the new Cayman regime looks similar to those in the jurisdictions that have already obtained favourable assessments.”
Alan Milgate, Chairman of AIMA Cayman, said: “ESMA’s decision should not be misinterpreted. Cayman has simply not yet been assessed, and has certainly not been adversely opined on, or excluded by ESMA. We look forward to the Cayman Islands being assessed positively in ESMA’s ongoing review of additional non-EU jurisdictions and that AIFMs based in the Cayman Islands will continue to benefit from evolving legislation which is both flexible and adaptable.”
Foto: Frank Lindecke
. ¿En qué 5 países habrá mayor transferencia de riqueza en los próximos 30 años?
Half of the world’s UHNW individuals with assets of at least US$30 million are expected to pass on their wealth in the next 30 years.This means that at least $16 trillion of wealth will be transferred to the next generation globally, marking the largest wealth transfer in history: In the next 10 years, a total of $4.1 trillion. In the next 20, the amount will reach 9.2 trillion. And in 30 years time, it will exceed the $16 trillion figure.
Where will it happen? According to the Wealth-X and NFP Family Wealth Transfers Report, The United States, with an expectation of over $6 trillion transfer hits the top position. Germany and Japan, with over $1.6 trillion each, United Kingdom, with $830 billion, and Brazil, with $560 billion, complete the top five.
“North America’s $6,350 billion of wealth expected to be handed down in the next 30 years represents 40% of the global total. In terms of global UHNW wealth, North America holds 35% of the total; this slightly higher amount being passed down to the next generation reflects the fact that North America’s UHNW population is older”, the report explains.
In Europe, things are different since it already has a higher proportion of inherited wealth -45% compared to only 25% in North America-, meaning that a large portion of wealth has already been transferred to the new generation.
The firms expect Asia´s UHNW population and wealth to become the largest in the world in the next 20 years. But the wealth creation is this region is so recent that there is not a big need to transfer yet. “Whilst we expect Asia to be at the center of wealth creation in the coming decades, it will still take a long time for the impact of this to affect wealth transfers to the next generation in the region”, the report says.
If we take a look at the countries with largest expected wealth transfers as proportion of UHNW wealth in the next 30 Years, we find that Malaysia, Taiwan, France, Japan and Brazil lead the ranking. The explanation offered by the Wealth-X and NFP Family Wealth Transfers Report for the presence of three Asian countries in the top five –with over or almost 70% of their wealth to be transferred- is that “in each of these countries some of the wealthiest billionaires are already in their 70s or 80s, and this has a disproportionate impact on the whole country.”
The latest Preqin research into infrastructure investment has found that the average deal size has risen 56% between 2013 and 2015 YTD. Transactions completed in 2013 had an average size of $401mn, compared to $626mn for deals done so far in 2015. The number of deals taking place each year has fallen notably in three years, from 1,056 in 2013 to just 325 so far in 2015. This comes alongside news that the majority of infrastructure investors now list valuations as their primary concern for the infrastructure market. Following a recent survey by Preqin, the proportion of investors concerned about current valuations of investments has risen from 13% in H1 2014 to 56% in H2 2015.
Average deal sizes in all geographic regions have hit record highs in 2015. In particular, deal size is up 42% in Europe and 13% in North America versus 2014. And, although average deal size has risen, aggregate deal value is not projected to meet 2014 levels by year-end. Estimated aggregate deal value reached $435bn in 2014, yet the aggregate deal value for 2015 YTD is only $204bn.
“Average infrastructure deal sizes have reached all-time highs so far in 2015, experiencing significant increases since 2013. However, this growth has not been completely linear across the industry. Transactions in the more developed infrastructure markets of North America and Europe have seen the largest increases in average deal value. Furthermore, the appetite for the favourable characteristics of brownfield sites among investors has driven prices for these assets up at a faster rate than infrastructure at both the greenfield and secondary stages. What worries investors is that capital committed now may not deliver the strong, stable returns to which they have become accustomed. Only time will tell whether large asset prices will have an effect on the overall performance of unlisted infrastructure funds currently investing capital”, comments Andrew Moylan, Head of Real Assets Products – Preqin.
Among other findings, according to Preqin, transport, telecoms and energy deals have all seen notable rises in average deal size over the past year, with the average transport deal size for 2015 YTD reaching $889mn, a 32% increase compared to 2014.
Since 2010, greenfield and secondary stage projects have seen average deal sizes rise by approximately 70%, while brownfield deals have increased by 148% in size. Since 2014, the average deal size for brownfield sites has increased by 35%.
Following valuations being named as the key issue for the infrastructure market by 56% of investors at present, 43% of respondents stated deal flow was a significant issue and 30% named performance.
Foto: Doug8888, Flickr, Creative Commons. Lombard Odier IM and ETF Securities Launch Emerging Market Local Government Bond ETF
Lombard Odier Investment Managers, a pioneer in smart beta fixed income investing, and ETF Securities, one of the world’s leading, independent providers of Exchange Traded Products (“ETPs”), have listed their emerging market local government bond ETF on the London Stock Exchange.
This fourth addition to the range of fundamental, fixed income ETFs, is designed to provide exposure to local government currency debt ofemerging marketsand developing countries, using fundamental factors that assess issuers’ creditworthiness to identify those that we believe are best-placed to repay their debt.
Today, emerging sovereign bondsoffer an appealing yield-to-maturity as interest rates in advanced economies are likely to remain low for longer. In addition, unlike market-cap benchmarks, which reward the most-indebted borrowers, our fundamental focused approach is designed to deliver quality-based diversification and includes exposure to India and China (the two largest emerging market countries).
Kevin Corrigan, Head of Fundamental Fixed Income, Lombard Odier IM commented:“We are extremely pleased to introduce our emerging market local government bond ETF to the European market. As interest rates in advanced economies remain depressed, relative valuation dynamics in emerging market debt are becoming interesting and our fundamentally weighted approach provides greater quality-focused diversification for investors. Lombard Odier IM has over five years of experience in fundamentally-weighted fixed income investing and our partnership with ETF Securities enables us to offer a wide range of investors an innovative approach to investing in emerging debt markets.”
Howie Li, Co-Head of CANVAS, ETF Securities added: “The suite of ETFs that we have brought to the market with Lombard Odier IM aim to capture the increasing shift towards more cost-effective investment solutions but, at the same time, provide an improved risk-adjusted return profile. Our first three products, launched in April, were well received and investors have already expressed their interest in the launch of this innovative emerging market ETF. With bond liquidity increasingly being a source of concern, investors in ETFs have extra liquidity support from the secondary market to help mitigate this. This liquidity support coupled with the ability to trade intraday makes the ETF vehicle an ideal access route into fixed income at a time when liquidity matters.”
CC-BY-SA-2.0, FlickrFoto: Dana Riza. Asia vuelve a repuntar: ¿Qué está pasando?
The decision by the PBoC to introduce the new FX regime serves two purposes, explains Global Evolution in its last analysis. First, the move should be seen as a step forward to comply with SDR eligibility. The IMF recently declined the Chinese calls for letting the CNY become a SDR currency as the fund criticized the gap between the CNY’s market level and daily fixings. In fact, the IMF and the US Ministry of Finance have both welcomed the Chinese policy shift.
Secondly, economic growth is in retreat and the export sector is in dire straits judged by recent export data. A weaker CNY could help stem the growth decline although most would agree that the 2.7% adjustment in USD/CNY since Monday August 10 will not make much of a difference, points out the firm.
Still, if the market believes that the CNY should weaken leading to capital outflows the CNY adjustment may have more legs in the weeks and months to come. The PBoC will lean against disruptive currency volatility but welcome a weaker currency as long as capital outflows are manageable and the CNY depreciation takes place in a controlled and orderly fashion. Inflation is a no worry for now. July’s headline CPI inflation may have increased to 1.6% YoY from 1.4% YoY in June but PPI inflation declined to minus 5.4% from minus 4.8% thereby hitting the lowest level since autumn 2009. To put things short, says Global Evolution, what we now have in China is a managed float and who can blame the Chinese authorities for letting markets determine the value of their currency.
Sin embargo, si el mercado cree que el yuan se debilitará esto provocará la salida de capitales y el ajuste de la divisa china podría continuar en los próximos meses. El Banco Popular de China luchará contra la volatilidad de la moneda, pero estará a favor de una divisa más débil, siempre y cuando las salidas de capital sean manejables y la devaluación del renminbi se lleva a cabo de una manera controlada y ordenada.
La inflación no es una preocupaciónpor ahora, afirma Global Evolution. La inflación subyacente del mes de julio podría haber aumentado hasta el 1,6% interanual desde el 1,4% interanual en junio, pero la inflación de los precios de producción industrial disminuyó hasta -5,4% desde -4,8%, marcando el nivel más bajo desde el otoño de 2009. Para resumir, lo que tenemos ahora en China es una fluctuación controlada y quién puede culpar a las autoridades chinas por dejar que los mercados determinen el valor de su moneda.
“The genie is out of the bottle and the Asian devaluation race is on as illustrated by the Vietnamese central bank’s decision to devaluate the Vietnamese dong by 2%. Elsewhere in Asia, depressed commodity prices will allow for easy monetary policies with central bankers happy to see their respective currencies staying weak and competitive”, explain the firm specialized in emerging and frontier markets debt.
In emerging Asia, Singapore, South Korea and Malaysia are the countries that are most exposed to the Chinese business cycle whereas in Latin America Chile stands out with an export to China worth around 7% of GDP.
In Asian frontier universe Mongolia stands out with an export exposure to China worth more than 30% of GDP whereas in Africa, Angola and Republic of Congo are the countries most exposed.
What are the consequences?
Asian local fixed income should perform well as headline CPI inflation stay subdued. The tricky part is FX, growth, the banking sector and budget performance. “We believe that local Asian currencies have limited upside potential over the next few months and have cut Asia significantly in our local currency strategies. India and Indonesia are the two countries where we still hold some exposure with our strongest conviction trade being India and with Indonesia offering a notable carry in compensation for currency risks”, point out.
“As to Asian hard currency debt, sovereign debt stocks are low and we do not see roll over risks as a problem (with FX reserves being amble). Spreads may face upside pressure should the overall economic outlook deteriorate but that is only a mark-to-market risk. Distressed market pricing or defaults are highly unlikely. Asia constitutes 23% in the typical hard currency benchmark (JPMorgan EMBI GD) and we typically hold only around 15% of AuM in Asian “pure” sovereign debt (no quasi-sovereigns) across funds within our hard currency strategy due to zero-weighting of China, Malaysia, India, Mongolia and Pakistan. Therefore we believe that our Asian exposure in hard currency debt is highly manageable”, concludes.
Global Evolution, an asset management firm specialized in emerging and frontier markets debt, is represented by Capital Stragtegies in the Americas Region.
The European funds industry faced estimated net outflows of €11.1 bn from long-term mutual funds for June. That said, mixed- asset funds enjoyed opposite flows with estimated net inflows of €12.1 bn during the month, followed by real estate products with €0.2 bn and commodity funds with €0.03 bn. However, bond funds faced estimated net outflows of €17.5 bn, bettered by equity funds (- €2.5 bn), alternative/hedge products (-€2.1 bn), and ”other” funds (-€1.3 bn). These flows added up to estimated net outflows of €11.1 bn from long-term investment funds for June.
“Despite these flows for June, the European investment industry enjoyed outstanding estimated net inflows of €296.5 bn into long-term investment funds for the first six months of 2015”, said Detlef Glow, Head of EMEA research.
Even money market products, an asset class that can be seen as a safe haven, faced massive outflows (-€34.7 bn) for June. Despite these outflows, money market funds still showed net inflows of €1.2 bn for the first half of 2015.
The flows for the money market segment brought the overall net flows for June to minus €45.8 bn and to a positive €297.8 bn for the first six months of the year.
The single fund market with the highest net inflows for June was Luxembourg (+€7.9 bn), followed by Switzerland (+€0.7 bn) and Denmark (+€0.2 bn). France (-€25.7 bn), Ireland (-€10.2 bn), and Italy (-€8.1 bn) stood on the other side.
Mixed-Asset EUR Flexible-Global (+€4.2 bn) was the best selling sector among the long- term funds, followed by Mixed-Asset EUR Conservative-Global (+€3.3 bn), Mixed-Asset EUR Balanced-Global (+€2.7 bn), and Equity Japan (+€1.9 bn) as well as Equity Eurozone (+€1.2 bn). At the other end of the spectrum Bond EUR suffered net outflows (-€5.0 bn), bettered somewhat by Absolute Return EUR (-€5.0 bn) and Bond EUR Corporates (-€3.5 bn) as well as Bond EMU Government (-€2.5 bn) and Equity Asia Pacific ex-Japan (-€2.3 bn).
