LPP launches £1.3bn credit fund
LGPS pool, Local Pensions Partnership, has launched a £1.3bn credit fund, offering returns linked to global credit markets and instruments. The fund will seek maximise risk-adjusted returns by capitalising on illiquidity premia and other technical factors in the global credit markets. Susan Martin, LPP chief executive, said: “At a time of continuing volatility in the global markets, the new fund can help investors achieve superior performance while mitigating downside risk.”
Housing association loans downgraded by Moody’s
Ratings agency Moody’s has downgraded 13 commercial mortgage-backed security loans made to a number of housing associations. Moody’s has taken the action due to the downgrade of the UK government’s credit rating, which it said has “direct implications for a number of structured finance transactions given their financial linkages”. It added: “Today’s affirmation of the ratings on 10 classes of notes reflect their ability to absorb the higher pool expected losses stemming from the increase in default probabilities.”
LGPS pool awards £38m mandate
Brunel Pension Partnership, the LGPS pool covering the South West of England, has awarded a £38bn mandate to investment manager State Street. The firm will provide the pool with services including custody, fund accounting, performance measurement and foreign exchange, as well as data, risk and environmental, social, and governance (ESG) analytics. Dawn Turner, chief executive at Brunel Pension Partnership, said: “The partnership we will have on integrating ESG reporting into State Street systems is very exciting.”
100% rates retention ‘set to hit county councils’
County councils could suffer a growing gap between income and the cost of providing services under 100% business rate retention proposals, according to new research for the County Councils Network. Its analysis showed that the funding gap for county authorities could increase by £700m by 2029 on top of any existing gap. CCN finance spokesman and leader of Leicestershire County Council, Cllr Nick Rushton, said: “CCN is supportive of moves towards greater local retention, alongside wider fiscal devolution, but we must ensure the system provides sustainable long-term funding and a platform to truly incentivise growth and self-sufficiency.”
Councils in joint treasury management tender
Four councils in south west England are teaming up to jointly procure a treasury adviser. Cheltenham, Forest of Dean, Gloucestershire and South Gloucestershire council have issued a tender for a five-year contract covering all aspects of treasury management strategies and annual investment strategies. The appointed adviser will be expected to give advice to each council separately.
Many European banks ‘distracted by restructuring’
The average return on capital for European banks stands at 4.4%, well below the hurdle rate, according to global management consultancy Oliver Wyman. In a new report, it found that about a third of large European banks are still focused on the full restructuring agenda, a third are almost finished balance sheet restructuring and are cutting costs, and a third have made sufficient progress to move beyond restructuring and have started investing for renewed growth. The report said: “Banks that are able to fully concentrate on this new transformation will have an important advantage over peers as we enter the next decade. However, all banks need to find ways to prepare and make initial steps on the journey.”
