Why is CPPIB investing in leveraged loans at a time when the credit crunch has led to tightening in credit markets?
CPPIB had very little exposure to corporate credit prior to the credit crisis last summer and recognized the market repricing as an opportunity to increase our exposure at attractive valuations. We chose to invest in leveraged loans after the credit crisis struck. As a long-term patient investor, we are well-positioned to hold these investments to maturity to earn attractive long-term risk-adjusted returns. We had both the liquidity and experienced partners with deep credit experience needed to prudently purchase senior performing debt at significant discounts to face value. We are confident our commitment of a total of US$2 billion in funds managed by Apollo Management and Blackstone Group to establish a diversified portfolio of senior secured loans will deliver superior risk-adjusted returns over the long term.
