Private debt beats Wisconsin benchmark

The State of Wisconsin Investment Board’s (SWIB) private debt holdings beat their benchmarks on a one, three, five and 10-year basis for the period ending March 2014, according to a report released by the pension fund’s investment board last week.

Wisconsin’s private debt portfolio generated a one-year return of 3.5 percent, according to the report. The portfolio generated 8.2 percent on a three-year basis, 12.6 percent on a five-year basis, and 8 percent on a 10-year basis. 

The portfolio distributed $23.3 million in cash through the first quarter, according to the report. Distributions included amortisation, prepayments, interest and fees.

SWIB has maintained a private debt programme for companies operating in the state’s lower and mid-market since the 1960s, according to its website. The programme provides senior debt financing to mid-market companies with revenue between $30 million and $750 million and subordinated debt to lower mid-market companies with revenue between $15 million and $150 million.

For the remainder of the year, Wisconsin will seek to “maintain pricing and structure disciplines and seek to add below investment grade loans opportunistically in 2014”, according to the report.

The report also detailed returns generated by private debt-related investment funds that Wisconsin committed to through its private equity allocation. SWIB had slightly more than $3 billion to credit and distressed-related vehicles as of 31 March, which had netted the pension fund an internal rate of return of 12.2 percent. Its allocation to mezzanine funds, to which it has committed roughly $1 billion, had netted 10.3 percent.

Wisconsin’s private equity portfolio had generated 12.8 percent overall as of the same date. SWIB is targeting $1.2 billion in new commitments for 2014.