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Peruvian manager to target LatAm and European pension funds

Peruvian manager to target LatAm and European pension funds

Credicorp Capital Asset Management is looking to take its Latin American corporate debt fund on the road to pension funds across Latin America and Europe now it’s reached over $100 million in assets.

The Luxembourg-domiciled Credicorp Capital Latin America Corporate Debt fund was launched in September 2014 and has now surpassed the minimum asset threshold for pension funds across Latin America of $100 million.

Up until recently the fund had been mainly distributed to private banks and family offices in the Andean region.

According to head of structuring and offshore products Rafael Castellanos, the firm is going through the due diligence process with a few pension funds and it will be launching a roadshow in Europe in the coming weeks.

Our coverage is much more on the ground than other funds [investing in Latin America],' Castellanos told Citywire Americas.

The fund is managed Victor Diaz and Rodrigo Barros who are backed by five analysts and eight traders, which as a team run a total of $980 million across its many Latin American debt funds domiciled in the region.

Diaz, speaking to Citywire Americas, explained the fund was a ‘moderate’ high yield fund, with the allocation split about 80% high yield and 20% investment grade bonds.

Castellanos said he believes the fund will be attractive to pension funds, especially in Europe, due to its focus on high yielding debt but also because its debt ratios are better than, for example, US high yield.

Diaz added: ‘The Latin American debt market is a mature market now. It’s survived multiple crisis periods and we feel comfortable with that, especially in Brazil and Chile.’

Strategy insight

As the fund focuses on high yield, Diaz said they look for an average bond yield of 6% and when bonds veer away from that they sell it off and replace it.

After a bit of a drought in issuances in 2015, the market has recovered with many new corporate debt names coming forward such as Costa Rican infrastructure operator Autopistas del Sol.

‘We’re seeing more variety in terms of countries,’ said Diaz. ‘The new names are what we’ve taken advantage of most.'

The managers have recently cut Brazilian food companies from their portfolios, which in the last few months has been hit by investigations over sanitation standards in meat companies.

Diaz also looks to the expertise of larger Credicorp Capital group.

Despite the downturn in commodity prices which took hold in 2014, Diaz kept specific Peruvian and Chilean miners on the recommendation of a team that focuses on the area and over the last few months has been adding to the position.  

‘The first quarter of last year we added a few more positions. We have coverage in not only bonds but equities with a view across all mines in Peru and Chile. That helped us understand a bit what strategies the companies were employing during the down cycle of commodities and which companies were going to survive.’

Since launching, the Credicorp Latin American Corporate Debt fund has returned 8.5%, while the JPM Cembi Board Diversified Latin America benchmark returned 13.1%.

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