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SWFI First Read, December 17, 2018

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Illinois Teachers’ Retirement System Partially Pulls Back on Risk Parity

The Illinois Teachers’ Retirement System pulled back on risk parity strategies. The pension reduced the US$ 455 million risk parity part of AQR Capital Management’s Multi-Strategy XIV. AQR still manages a substantial portion of the pension’s assets at an estimated US$ 2.4 billion. In addition, the pension redeemed US$ 300 million of the US$ 522 million from Bridgewater Associates’ All-Weather risk-parity strategy. Bridgewater Associates continues to run over US$ 450 million for the pension fund.

Qatar Petroleum Inks Deal with Eni on Mexican Oilfields

Qatar Petroleum signed a deal with Italy’s Eni S.p.A. to purchase a 35% stake in three offshore oilfields in Mexico. Qatar Petroleum is getting interests in the Amoca, Mizton and Tecoalli fields in Area 1 of the Campeche Bay complex. Qatar Petroleum already holds a number of positions in Area 1 as being a member of the Shell-Eni consortium. Post-transaction, Eni and Qatar Petroleum will have 50:50 ownership over Area 1 of the Campeche Bay complex. The deal needs final approval from the Mexican government.

Saudi Fund for Development Reschedules Some Jordan Loans

Jordan remains stuck in an economic crisis. The Saudi Fund for Development and Jordanian government inked a deal to reschedule US$ 114 million worth of loans owed to the Saudi fund. The debt pool consists of 19 due loans that will be settled over a period of 20 years, with a grace period of 5 years. The Saudi Fund for Development has contributed to the financing of 20 economic and social projects in Jordan from 1975 to 2017, with a value estimated at US$ 488 million.

Jabre Capital Closes Three Funds to Outside Capital

Geneva-based Jabre Capital Partners SA is returning client assets in three funds managed by Philippe Jabre due to a challenging year in 2019. Jabre Capital Partners will still run two funds with external capital, a European credit fund and an emerging markets fund.

Qatar Steps Up for Lebanon, Plans $500 Million Bond Purchase

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Qatar Sheikh Tamim bin Hamad Al Thani appeared at an Arab economic summit and it was revealed that Qatar plans to purchase US$ 500 million of Lebanese government bonds. Earlier, there was speculation Qatar was going to deposit US$ 1 billion in Banque du Liban (Bank of Lebanon), which was never confirmed by the bank.

Lebanese officials in January revealed the possibility of a debt restructuring. The International Monetary Fund calculated that public debt in Lebanon is at over 160% of gross domestic product this year and could raise to around 180% by 2023.[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Turkey Wealth Fund Could Provide Support to Credit Card Debt Market

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Recep Tayyip Erdoğan, the President of Turkey, has a new reform to jump start the consumer debt-laden economy, and it involves Turkey’s sovereign wealth fund. His strategy is to offer money to those facing overwhelming credit card debt. Ziraat Bank (Türkiye Cumhuriyeti Ziraat Bankası) will allow borrowers to apply for debt rescheduling and secure lower interest rates. Erdogan announced that “Any retail client from any bank can apply.” Credit card debt is a monstrous problem in the country. Consumer credit has exploded due to low rates, government assistance, and easy credit availability. Last summer, non-housing debt reached US$ 97 billion. Half of this is credit card debt. Over US$ 30 million is non-performing. The debt was accumulated in foreign currencies, because they used to provide the lowest interest rates. Unfortunately, as the Turkish lira’s exchange rate cratered, much of the debt became impossible to service. The lira is among the world’s weakest currencies. Erdogan expects a smooth transition, “They will pay off their debt with a loan from Ziraat, and will pay it back according to the level of their monthly earnings.” Ziraat Bank is managed by Turkey’s sovereign wealth fund, which is chaired by President Erdoğan.

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KIC Sells City of London Office to South African Investor

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Investec Structured Property Finance, part of Investec, provided a £107 million loan to a South African investor being represented by London-based Pembrey Asset Management Ltd to acquire an office in London at One Bartholomew Lane. The Korea Investment Corporation (KIC) is the ultimate owner of the office and is selling it through Hines UK, part of Hines. BNP Paribas Real Estate acted on behalf of Pembrey Asset Management and CBRE acted on behalf of Hines.

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