January 14, 2022
By John Petchler, CFA, Director, Private Placements
Conning clients saw strong relative value in private placements in 2021 and committed nearly 50% more dollars to the asset class than in 2020. This was the second consecutive year of substantial increases from Conning clients, and as we begin 2022 we continue to see opportunities in the sector along with expectations for a more diverse issuance pipeline in February after the annual industry conference.*
One of the regulatory changes in the private placement market for 2022 that we are following closely is a new rating filing requirement by the NAIC’s Securities Valuation Office (SVO). Effective 01/01/22, for any newly issued private placement that is purchased after this date, the insurance company completing the regulatory filing for this asset as lead purchaser must file with the SVO a copy of the rating agency rationale that was issued accompanying the purchase, assuming there was a private letter rating. Conning, as an experienced private placement asset manager, has always performed this service for its private placement clients when we have been lead investor on a deal and will continue to do so.
Click below to continue reading Conning’s Regulatory Update, “Private Placements Interest Grows; Conning Managing New NAIC Requirement for Clients."
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*Past performance is not a guarantee of future results
Market Risk – Market, or systematic, risk is the risk that individual securities may be correlated with general market downturns regardless of the particular business conditions and outlook for the individual companies
Credit Risk – Eroding fiscal health in issuing companies resulting in inability to meet debt obligations
Inflation Risk – Inflation erodes the purchasing power of future cash flows from investments. In times of high inflation the value of securities may be reduced
Liquidity Risk – Liquidity risk can occur when market conditions do not allow transactions to be made in a quick and orderly fashion in relation to indicative market prices