Investment Grade: PRIVEST

PGIM Private Capital’s long experience in investment grade private placements has resulted in outperformance versus public bond benchmarks, and a favorable loss experience.

Investment Objective

  • Targets +100bps over Barclays Global Aggregate Index
  • Also aims to outperform the Barclays US Credit Index by +100bps
  • Inception to date since 1976, has outperformed the AGG by +149bps, US Credit by +93bps

Approach

  • A-/BBB+ average quality at origination (BBB+ average)
  • Diversification within sectors relative to the Barclays U.S. Credit Index
  • Focused on U.S. traditional private placements to middle-market issuers, with up to 25% of the portfolio invested in non-US issuers

Portfolio Characteristics

  • Market Value: $6,912.3 million
  • Average Issue Size:     $13.2 million
  • Average Life: 7.2 years
  • Modified Duration: 5.7 years
  • Portfolio Average Quality:  BBB+
  • Number of Issues: 487
  • Number of Issuers:  316

Quality Distribution1

  • Cash: 2.4%
  • AAA/A+: 5.3%
  • A/A-: 26.0%
  • BBB: 63.3%
  • Below Investment Grade: 3.0%

Sector Distribution

  • Industrial: 65.5%
  • Utility: 19.5%
  • Finance: 15.0%

BELOW INVESTMENT GRADE: PRIVEST PLUS

PRIVEST Plus is an Insurance Company Separate Account organized under a group annuity contract. It is a commingled vehicle that has been in existence since 2004, and focuses on high quality, high yield private placement investments. PRIVEST Plus is only available for investment by qualified U.S. pension plans. 

Benchmark: BofA Merrill Lynch BB-B U.S. High Yield Constrained Index 

Strategy 

  • BB+ focus (Lower Investment Grade, High Yield, and up to 10% “distressed” sleeve) 
  • Focus on fixed-rate U.S. traditional private placements to middle-market issuers (full call protection) 
  • Industrial concentration 

Terms 

  • Open-ended commingled insurance company separate account 
  • Quarterly contributions / withdrawals

 

 

Portfolio Characteristics 

Market Value: $742 million 
Average Issue Size: $9.7 million 
Average Life: 4.5 years 
Modified Duration: 4.0 years 
Portfolio Average Quality: BB+ 
Number of Issues: 76 
Number of Issuers: 60 

Quality Distribution 

Cash: 2.9% 
Treasury: 0.2% BBB/BBB-: 30.5% 
Below Investment Grade: 66.4% 

Sector Distribution 

Industrial: 70.0% 
Utility: 23.1% 
Finance: 6.9% 

INFRASTRUCTURE DEBT

 

Infrastructure Debt

$26.2 BILLION

ASSETS UNDER MANAGEMENT

SINGLE INVESTOR ACCOUNTS

 

Strategy 

  • Investments available via a co-investment program with Prudential Financial Inc.’s General Account 
  • Focus on traditional private placements to middle-market issuers in Western Europe 
  • Industrial concentration with low finance exposure 
  • Highly focused credit culture 

Terms 

  • Customizable accounts subject to the client’s objectives, which could include various investment guidelines or restrictions, including quality, currency, sector, and term 
  • Investor holds the securities in its own name and all cash flows directly between the investor and the issuers 
  • PGIM Private Capital performs regular reporting services 
  • PGIM Private Capital manages the assets on behalf of the investor 
  • Eligible institutions are those with the ability to invest in private placement assets 

NON-USD INVESTMENTS

 

PGIM Private Capital has offices in London, Frankfurt, Mexico City*, Milan, Paris and Sydney**, and follow the same strategy used in the U.S., with a regional office network focused on building relationships with middle-market companies seeking long-term, fixed-rate debt. 

Options are available in a variety of currencies. 

Pricoa Sterling Corporate Bond Fund 

  • The Pricoa Sterling Corporate Bond Fund is a Qualified Investor Fund that closed with an initial commitment of £300 million in 2012 
  • The Sterling Fund invests in private placement investments originated outside of the U.S. and denominated in pounds sterling 
  • The Fund is only available to qualified institutional investors located outside of the U.S.
  • The Fund is closed to new investors, but other options outside of the U.S. are available 

Pricoa Euro Corporate Bond Fund 

  • The Pricoa Euro Corporate Bond Fund is a Qualified Investor Fund that is still being actively marketed and will be listed on the Irish Stock Exchange
  • The Euro Fund will invest in private placement investments originated outside of the U.S. and denominated in euros 
  • The Fund is only available to qualified institutional investors located outside of the U.S. 

INVESTMENT TEAM
 

Al Trank
Executive Managing Director
Portfolio Manager
Phone: 973-802-8608
Email: click here to contact
Territory: All

Allison Lam
Senior Investment Associate
Phone: 973-367-7073
Email: click here to contact
Territory: All

 

 

 

1. Duration adjusted with the exception of Inception returns.

*As of 12/31/18

*Operates through PGIM Real Estate Mexico S.C. 

**Operates through PGIM (Australia) Pty Ltd.