PensionDanmark snaps up $750m in infrastructure loans
GLOBAL - PensionDanmark is buying up $750m (€603m) of loans for infrastructure projects, taking advantage of forced selling by European banks having to shrink their balance sheets.
JP Morgan Asset Management won the mandate to acquire and manage a portfolio of senior secured infrastructure loans in Canada, Europe and the US.
Torben Möger Pedersen, chief executive of the Danish pension fund, said: "The current market situation has created an opportunity, where we are able to acquire long-term senior secured infrastructure loans at very attractive risk-adjusted spreads."
In the first deal, PensionDanmark is acquiring a portfolio of UK infrastructure project finance loans from Bank of Ireland for around $292m.
The pension fund pointed out that many European banks now had to shrink their balance sheets due to high leverage, funding constraints and more stringent capital requirements for long-dated loans.
Möger Pedersen said PensionDanmark had been looking at different models to get into the market for secondary loans.
"The mandate is structured as a segregated mandate where PensionDanmark acquires the loans on its own balance sheet, and has therefore been able to tailor the investment guidelines to its specific needs," he said.
The mandate is expected to be executed in the next 12 months.
Bank of Ireland announced the sale of the UK portfolio as part of an overall divestment of €10bn of international loans.
The portfolio contains total commitments of about $350m, which PensionDanmark has bought for around 83.5% of the principal.
"We are convinced this new initiative will give our members a good and attractive, risk-adjusted return on their pension savings," said Möger Pedersen.
"At the same time," he added, "we hope PensionDanmark's initiative will assist European bank sector deleveraging and contribute to loosening the credit squeeze in Europe that has made it difficult for many - especially small and medium -sized enterprises - to get financing, which poses a serious risk to growth and employment in Europe."
Bob Dewing, head of JPM's asset management infrastructure debt group, said: "This transaction is yet another confirmation of our premise that infrastructure debt is attractive to institutional investors wishing to match-fund their longer-term liabilities."
PensionDanmark said the JPM mandate was a continuation of its strategy to invest more in credit and infrastructure.