NJ’s investment division proposes $1bn commitment to PGIM Fixed Income

The proposed allocation would be deployed via liquid, broadly syndicated loans.

The New Jersey Division of Investment has proposed a commitment of as much as $1.01 billion to be managed by PGIM Fixed Income Separate Account, according to a memo this summer from the division. Both New Jersey DOI and PGIM Fixed Income declined to comment.

The proposed investment vehicle, to be managed by PGIM Fixed Income, will focus on a “diversified, levered, long-only, US senior secured loan strategy”, according to New Jersey DOI. Its portfolio will be comprised of “below-investment-grade, liquid, performing floating-rate loans to US corporate borrowers across industries, creditworthiness and size” in more than 200 underlying positions.

New Jersey DOI, based in Trenton, believes the commitment to PGIM Fixed Income will allow the division to manage the pension fund’s asset allocation more efficiently. If the full $1 billion is deployed, it is estimated to reach an annualised yield improvement of more than $47 million, with treasuries and cash equivalents rotating in and out of the fund, it said.

The DOI also noted that the commitment will accelerate deployment of private credit, which will be fully deployed via liquid, broadly syndicated loans rather than a traditional private credit drawdown, which could take several years to fully deploy, it said.

The proposed commitment marks the largest for New Jersey DOI this year, with previous commitments this year of €200 million into Intermediate Capital Group’s ICG Europe Fund VIII, €150 million into CVC Credit Partners EU DL II Co-Invest Fund and $125 million into Strategic Value Partners’ Strategic Value Special Situations Fund V, according to PDI research.

Newark, New Jersey-based PGIM Fixed Income manages $919 billion and is the public fixed income business of PGIM, an asset manager with $1.5 trillion in assets under management.