“It turned out that the Fed was brilliant in that by simply announcing the TALF program, it became a safety net for spread levels and caused the market to behave more normally as spreads shrank. were narrowing compared to very wide spreads, ”Mr. Long said. Palmer Square Capital manages $ 12.1 billion, including a new TALF fund.

Sources have estimated that the universe of TALF managers is likely to manage $ 2.5 billion to $ 4 billion in their funds, although most of the fund managers contacted declined to comment on their TALF strategies.

Some of the institutional fund managers who launched TALF funds but declined to comment include: AllianceBernstein LP., Black rock Inc., Hildene Capital Management LLC, Invesco Ltd., Loomis Sayles & Co. LP., MacKay Shields LLC, Morgan stanley Investment management, TCW Group Inc. and Varadero Capital LP.

Demand for TALF investments from institutional investors has been high, leaving managers with plenty of cash on hand or available through capital calls to be implemented within three years before loans are due to be repaid in. a very difficult investment environment, observers said.

“For plan sponsors, in this environment, TALF investments look pretty good relative to their risk tolerance given that TALF managers buy AAA rated fixed income securities with good funding terms. TALF is like an object. brilliant in a world with no return opportunity, ”said Mr. Long of Palmer Square.

Mr Long said demand for Palmer Square’s new TALF fund “was very high” and the company stopped accepting assets after the fund’s second close and created a waiting list. Mr. Long declined to provide the size of the fund.

In May and June, Pensions and investments owners of reported assets invested or committed a total of $ 972 million in TALF strategies.

Among the most significant investments were commitments of up to $ 250 million each out of the $ 51.2 billion Illinois State Teachers Retirement System, Springfield and the $ 74.9 billion Massachusetts Retirement Reserves Investment Management Board, Boston.

In May, MassPRIM signed up for a separately managed TALF account managed by Loomis Sayles.

Illinois TRS chose not to invest directly in a TALF fund and instead gave the existing manager Pacific Investment Management Co. LLC discretion in April “to directly purchase TALF-eligible securities … but only if the opportunity arises” in a separately managed distress account, said Scottie D. Bevill, senior investment manager for global fixed income , in an email.

“It was a cheaper option for TRS and there were still too many unknowns in April. As soon as the Fed announced new (relief) programs, including buying corporate bonds, the spreads have collapsed … outside of inheritance (CMBS), “Mr. Bevill said.

Market conditions have placed some TALF managers in an investment holding pattern.

Sun Life Capital Management (US) LLC, New York, launched its TALF fund on June 17 after capping fundraising from institutional investors at $ 550 million. Demand for the fund was high and was twice oversubscribed, the company said.

“Credit spreads have tightened considerably since the Fed announced the TALF in mid-March. We are closely monitoring market dynamics but are currently suspending capital investment until expected returns meet our expectations, “the statement read.

The company noted that its TALF strategy launched in 2009 had an annual internal rate of return of 21.5%. SLC Management (US) and its Canadian subsidiary manage a total of $ 180 billion.

Voya Investment Management has raised around $ 500 million for its new TALF 2.0 fund on “robust” demand, said David S. Goodson, managing director and head of securitized investments based in Atlanta, in an email.


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