Alecta and PGGM have entered into a credit-risk-sharing deal with JP Morgan that covers around $2.5bn (€2.1bn) of corporate loans.
The transaction is for a multi-year programme covering both existing and new loan origination.
Alecta and PGGM entered into the deal as part of their relatively new credit-risk-sharing co-invesment collaboration, announced in May this year.
JP Morgan is a new credit-risk-sharing partner for PGGM, which has been involved in this asset class for several years.
In a joint statement, Alecta and PGGM said being able to benefit from the long-standing expertise and network of JP Morgan, a market-leading institution, was “key”.
Mascha Canio, head of credit & insurance-linked investment at PGGM, said: “We are very proud to have achieved our first risk sharing transaction together, and have Alecta involved as well.
“With JP Morgan accessing this credit risk management tool, it provides further evidence to its value for banks across the globe. We continue to believe in the enormous growth potential for credit risk sharing transactions.”
Sweden’s Alecta only started investing in credit-risk-sharing earlier this year, and Tony Person, the pension fund’s head of fixed income and strategy, said it welcomed the addition to its portfolio.
“For Alecta the transaction offers a valuable source of credit diversification, and we see plenty of scope getting exposure to many different loans books from SME lending to project finance and thereby providing additional capacity to lend to the real economy,” he added.
Investing on behalf of Dutch healthcare sector pension fund PFZW, PGGM has been building a credit-risk sharing portfolio since late 2006. As at the end of September the portfolio stood at €5.3bn across 24 different transactions.
With credit-risk-sharing transactions, banks transfer part of the credit risk of a loan portfolio to investors while also keeping part of the risk, freeing up capital for new loans.
The investments themselves are in balance sheet synthetic securitisations. PGGM said it refers to them as credit-risk-sharing transactions “as this name better reflects their nature and purpose in our portfolio”.
PGGM has taken its credit-risk-sharing strategy a step further by forging a partnership with Sweden’s Alecta