Illinois Municipal terminates $550m Pyramis mandate

Proceeds from the termination will be used to fund commitments to Babson Capital and Crescent Capital. 

The Illinois Municipal Retirement Fund (IMRF) has terminated a $550 million high yield fixed income mandate held by Pyramis Global Advisors, redistributing the mandate across three new commitments and one existing relationship.

“Pyramis did not meet its Minority, Female, Persons with a Disability Owned Business (MFPDOB) brokerage utilization goal for 2013,” IMRF wrote in a statement, adding that the $33.64 billion retirement fund’s policy requires high yield fixed income managers to place at least 5 percent of their brokerage commissions with MFPDOB brokers annually.

IMRF will use proceeds generated by the termination to make three new commitments; up to $125 million to Babson Capital Global Loan Fund, up to $125 million to Crescent Capital Management High Income Fund and up to $200 million to Standish Emerging Markets Debt Opportunistic Fund.

The retirement fund also committed $50 million to an existing high yield bond mandate held by MacKay Shields. All four commitments are subject to legal diligence.

“The new allocations will add bank loan, opportunistic, and emerging market debt strategies to IMRF’s non-core fixed income portfolio,” according to a statement from the retirement fund. IMRF will fund the commitments from proceeds generated by the termination of its Pyramis High-Yield Fixed Income mandate.

IMRF had not responded to Freedom of Information Act request for meeting materials related to those commitments. A legal liaison for the retirement fund said that investment staff could not respond to within the typical five business limit “without unduly burdening or interfering with our operations”.