SLC Management, the $168 billion institutional asset management business of Sun Life Financial, today announced the successful closing of their Term Asset-Backed Securities Loan Facility (TALF) 2020 strategy for institutional investors. SLC Management previously managed a successful TALF strategy in 2009 under the same portfolio management team, which resulted in an annual IRR of 21.5%.*
Investors can finance the purchase of high-quality AAA-rated asset backed securities (ABS) using Federal Government loans for the period during which the TALF program is available, currently between June and September 2020. Sun Life, SLC Management's parent and affiliate, will also be investing in the strategy. This co-investment reinforces an alignment of interests among Sun Life, SLC Management and their clients. The SLC Management TALF 2020 strategy is already two-times oversubscribed.
"In an unprecedented market environment, TALF 2020 provides the opportunity to generate strong returns while investing in AAA-rated securities. We believe this is a compelling risk-adjusted strategy for our clients," said Chris Adair, Head of U.S. Business Development and Client Relationships, SLC Management. "At SLC Management, we've consistently outperformed benchmarks in investment-grade ABS and securitized credit markets. Our portfolio management team successfully managed the TALF program in 2009 and they will apply a similar philosophy and consistent approach to our 2020 strategy. We believe this direct experience will be a critical factor to ensuring its success."
The Federal Reserve's TALF 2020 program is designed to ensure the continued flow of consumer credit during the COVID-19 crisis. The Fed will facilitate this by extending up to $100 billion in non-recourse loans to investors in certain AAA-rated ABS and Commercial Mortgage Backed Securities (CMBS). Investors' success may be determined by several factors including the expert evaluation of credit risk and their ability to participate in the TALF program at the earliest possible date to take advantage of prevailing credit spread dislocations.
Daniel Lucey and Phil Mendonca, co-portfolio managers on SLC Management's Total Return Fixed Income team, will manage the firm's TALF 2020 strategy. Both managers oversaw the TALF 2009 strategy.
"Based on our experience in 2009, we know TALF provides a great opportunity for our clients," said Daniel Lucey, Managing Director and Senior Portfolio Manager, Total Return Fixed Income, SLC Management. "With our long track-record of success and our confidence in the relative value of AAA-rated ABS and CMBS, we're excited to be able to bring this opportunity to institutional investors."
SLC Management also believes the securitized sector of the market currently offers attractive opportunities outside of the TALF program. Under current guidance, TALF eligible assets are restricted to AAA-rated securities. However, outside of the AAA-rated segment, recent volatility has led to significant spread widening in a number of other investment grade securitized sectors. SLC Management has been working with clients and prospects to try to take advantage of these dislocations through opportunistic securitized portfolios.
About SLC Management
SLC Management is a global institutional asset manager that offers institutional investors traditional, alternative, and yield-orientated investment solutions across public and private fixed income markets, as well as global real estate equity and debt. SLC Management is the brand name for the institutional asset management business of Sun Life Financial Inc. ("Sun Life") under which Sun Life Capital Management (U.S.) LLC in the United States, and Sun Life Capital Management (Canada) Inc. in Canada operate. BentallGreenOak is also part of SLC Management and is a leading, global real estate investment management advisor and a globally-recognized provider of real estate services. As of March 31, 2020, SLC Management has assets under management of C$236 billion (US$168 billion).
