Two structured credit funds included in PINs Securities NZ (PINS NZ) portfolios have temporarily halted redemptions.
In a statement released to the New Zealand stock exchange, PINs NZ, a listed issuer of credit-backed protected income notes (PINs) built for retail investors in New Zealand, confirmed that redemptions from and applications to the Absolute Capital Yield Strategies fund (YSF) and the Miami-based United Capital Asset Management Horizon ABS Fund L.P. had been halted. The issuer said that the defensive actions were triggered by widening credit spreads and the draining of liquidity from credit markets. The YSF fund has less than 5 per cent exposure to the embattled US sub-prime housing market. The action would prevent “assets having to be sold in unfavourable trading conditions,” the statement said. Meanwhile, PINs NZ disclosed that broadening credit spreads had reduced the net asset value (NAV) of portfolio notes, which are based on information covering capital and equity components supplied by underlying managers. The NAV of the portfolio note applying to PINs Series 2006-1 was $98.15 for each $100 at July 23, with the capital component valued at $61.06 and the equity segment at $37.09. PINs NZ said that capital guarantees written on the notes were unaffected, and coupons being paid today, July 31, would not be altered. Within the portfolio of 20 funds underlying the PINs NZ 2005-1 series, the YSF holds a 6.4 per cent weighting, while the Horizon Fund carries a 1.8 per cent weighting in the 2006-1 series, which draws on 29 funds. PINs, which are interest-bearing notes embedded with capital protection at maturity, draw on funds with varying levels of exposure to credit markets, including ‘defensive’ credit funds that have started buying assets from emerging forced-sellers of downgraded debt. While PINs NZ issues the notes, boutique structured credit manager Absolute Capital is the investment manager backing them. The 2006-1 and 2005-1 PINs series guarantee annual 9.25 per cent returns. The notes have drawn more than NZ$50 million from investors.
Since taking over the top job at the $44 billion Funds SA more than a year ago, chief executive John Piteo has ushered in an investment function overhaul and wrapped up an important stage of the fund’s five-year data transformation program. It pledges to recentre around investment performance and more efficient processes, as the “missing piece” has been found in incoming CIO Con Michalakis.
Darcy SongJanuary 10, 2025
