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SWFI First Read, January 14, 2019

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QIA Plans More Investments in U.S., While Stepping Back from Europe

The Qatar Investment Authority (QIA) seeks to expand its portfolio of U.S. investments from US$ 30 billion to US$ 45 billion over the next two years, as the QIA shifts investments away from continental Europe. QIA continues to seek out real estate, buyout opportunities, technology, and growth-investments in the U.S.

Bill Gross’s Bond Fund Breaches Below US$ 1 Billion

Former PIMCO bond guru Bill Gross, who now calls Janus Henderson Group plc his home, faces even more fund redemptions. Gross manages the Janus Henderson Global Unconstrained Bond Fund, which had around US$ 60 million in redemptions in December 2018, lowering assets under management to an estimated US$ 950 million from an apex of US$ 2.24 billion in February 2018. Gross took a bold bet that interest rates on U.S. Treasuries and German bunds would converge. The fixed income strategy did not pay off in 2018, according to fund performance figures.

RBI Provides US$ 400 Million Swap to Central Bank of Sri Lanka

The Reserve Bank of India (RBI) agreed to provide US$ 400 million in a swap arrangement with the Central Bank of Sri Lanka. The RBI was seeking to boost Sri Lanka’s reserves. RBI is providing the swap funds under its South Asian Association for Regional Cooperation swap facility.

Pension Unit of Jardine Matheson Hires Willis Towers Watson for OCIO

Jardine Matheson, the Hong Kong conglomerate, hired an outsourced chief investment officer (OCIO) for its pension fund assets. The OCIO mandate was awarded to Willis Towers Watson. The pool of pension assets is quite small, which is estimated less than US$ 500 million in liabilities.

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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