PrefBlog

Some public sector funds in the US have banned placement agents:

The move by some U.S. public pension funds to ban middlemen who market the services of private equity and hedge fund investments is misguided, according to Michael Travaglini, Massachusetts system executive director.

The funds would be better served installing more checks and balances to prevent undue political influence, Travaglini said. New York, for instance, should broaden control of its pension so the state comptroller is no longer sole trustee, Travaglini said in a telephone interview.

New York State Comptroller Thomas DiNapoli, who runs the $121.9 billion fund, banned the use of placement agents, lobbyists or other paid intermediaries last month amid a widening pay-to-play investigation. New York City similarly told money managers they could no longer use middlemen get pension fund business.

“There’s a legitimate place for placement agents,” said Travaglini, who’s helped run the $34.2 billion retirement fund for public employees in Massachusetts since 2004. “I’m amazed that a political corruption case has led people to question the legitimacy of a long established part of the asset management business.”

The ban is craziness, but there will be many more babies thrown out with the bathwater as political posturing takes centre stage.

DBRS is forecasting a preponderance of downgrades in 2009:

In a commentary released today, DBRS notes that it has seen a significant increase in credit deterioration in Q1 2009. According to the report, corporate credits finished the quarter on a negative tone, with approximately 16% of the DBRS universe facing negative rating action over the next 12 months. In contrast, only 2% of credits reviewed by DBRS were facing positive rating action.

The preferred share market continued its rally today, with PerpetualDiscounts roaring ahead as – perhaps – the market has realized why embedded calls at par in five years are valuable for issuers of FixedResets.

This entry was posted on Monday, May 4th, 2009 at 7:05 pm and is filed under Market Action. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.