Samantha Costanzo

Our latest Stewardship Report is out! This year's report (link in comments) includes 30-odd case studies covering a selection of what we consider to be of most interest to our members, regulators, peers and others. Highlights from this year's Report: ✅ Escalation in members' best interests: how Railpen seeks to use all the tools in the stewardship toolkit to achieve our objectives on material ESG issues ✅ Working with industry to advocate for continued investor protections: this covers our (ongoing) work both with the Investor Coalition for Equal Votes (ICEV) but also with several hundred billion £ of scheme AUM on recent proposals to roll back important shareholder rights in the UK ✅ Integration beyond listed equity: Railpen is a significant private markets and infrastructure investor - and there are some great case studies highlighting how we continue to deepen our approach ✅ Greater accessibility: this is necessarily a lengthy report, but this year - as well as our usual glossary - the Design and Comms team has worked hard to improve navigation so that readers who aren't ESG experts can more easily cut through the jargon and move between relevant case studies and sections As always, this has also required significant contributions from colleagues beyond the Sustainable Ownership team. However, we welcome the additional opportunity for formal reflection and to produce a report we are proud of. We also find the stewardship reports we receive from our managers to be the most useful firm-level reporting produced: we read these cover to cover and they always provide us with helpful information as to what is (and isn't) being done on our members' behalf. My ongoing thanks to the Financial Reporting Council for creating and upholding a Code that gives investors the space to discuss their idiosyncrasies and what worked (or didn't work), and thereby produce insightful reporting. My bottom-of-the-heart thanks to colleagues from Design, Communications, Fundamental Equity, Public Markets, Internal Audit, Client Secretariat, HR, Compliance, the DE&I Committee as well as the Trustee and many more for their ongoing commitment, enthusiasm and support both for this report and the work which underpins it: this would, as always, not have been possible without you. Michael Marshall Adam Gillett Jessica J Cassey David Vyravipillai Sophie Harris Thomas Ward Shane McCullagh, CFA Jasmine Porter Megan Williamson Becks Goodman Colin Mitchell Paul O'Donnell Laura Faber Claire Morrell Philip Wood MCMI Jonathan Clark Johanna Venis MCIPS Caroline Hopper James Herbert Stuart Mackintosh Fenella Cuthbert Josh Sarson

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It is a privilege and an honor that our team has asked me to do a short video explaining to the outside world: Who we are, What we do, and How we do it.    www.cambridgewilkinson.com   Capitalize on Our Connections. #team #capitalraise #debt #equity #privatecredit #scale #privateequity #familyoffice #insurance #sovereigns #endowments #fundfinance #specialtyfinance #realestate #partnership #buyouts

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FDIC CHAIR ON SVB, US 2023 BANK FAILURES Recent speech below. Mentions new FDIC paper on deposit insurance rework. “This experience has focused our attention on the need for meaningful action to improve the likelihood of an orderly resolution of a large regional bank under the FDI Act without the expectation of invoking the systemic risk exception. In light of our experience, we are taking important steps to make reliance on the systemic risk exception much less likely. They include better aligning capital requirements with changes in the value of securities, building loss-absorbing capacity with long-term debt requirements, improving resolution planning at the bank level, and strengthening bank supervision… “In late July 2023, the three federal banking agencies issued a Notice of Proposed Rulemaking (NPR) to implement the Basel III capital rule.9 There are many aspects to this proposal, but one in particular is a step toward addressing one of the key vulnerabilities of the recent failures. Under the proposal, unrealized losses on available for sale securities would flow through regulatory capital for all banks with more than $100 billion in assets. This means that these banks, in order to maintain their capital levels, would need to retain or raise more capital as these unrealized losses occur.” Federal Deposit Insurance Corporation (FDIC) Silicon Valley Bank New York Community Bank (NYCB) Signature Bank First Citizens Bank #firstrepublic #fdic

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Our Corporate team have identified USD800bn of debt sitting on cusps of the ‘A’ and ‘BBB’ categories. At the ‘A’ level, USD550m belonging to Chinese issuers with IDRs linked to the sovereign, but the cusp list also includes Intel and PECO Energy Company in the U.S. The split of debt on the cusp of the ‘BBB’/‘BB’ categories is more balanced, although leans slightly more towards downgrades, with 26 potential fallen angels (USD180bn aggregated debt), compared to 17 potential rising stars (USD120bn aggregated debt). Boeing’s debt accounts for about one-third of the total debt of all potential fallen angels, following its Outlook revision to Negative. The free-to-air summary from colleagues Emmanuel Bulle and Tatiana Kordyukova, highlighting individual issuers, is at https://lnkd.in/eKVn56-r; the full report for subscribers is at https://lnkd.in/ewP7G2nT. #fitchoncredit #investmentgrade #creditratings

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In MFS’ view, sustainability considerations are jigsaw pieces of the fundamental research puzzle and need to be integrated when material. Learn about our approach, 2023 engagement activities and more in our latest Annual Report. bit.ly/3UWXH2a.

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BlackRock’s Secondaries & Liquidity Solutions team recently published their semiannual Secondaries Market Outlook 1H 2024. Increased adoption of secondaries by both LPs and GPs has led to 4x market growth over the last ten years, and we believe the market is well positioned for continued expansion.   In 2023, the continued search for liquidity resulted in the 2nd highest year of closed transaction volume on record at $115bn, and the 3rd straight year over $100bn. This volume is being accelerated by lower M&A and IPO activity causing sellers to look for alternative sources of liquidity. Buyers are also achieving meaningful discounts (avg. 85% of NAV in 2023) for high-quality assets. We are keeping our eyes on opportunities for investors and believe 2024 will be a big year for the secondaries markets. Another way that BlackRock is meeting our clients’ liquidity and performance needs. Well done, team! Read the full publication here: https://1blk.co/4bhUUXM #Secondaries #PrivateEquity

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Finishing up a productive week at the annual Milken Institute Global Conference in California. It was an honor to participate in a panel discussion on the significant changes we’ve seen in asset management over the past few years, and what they mean for our business moving forward. My thanks to fellow panelists Kamal Bhatia from Principal Asset Management, Dan Bienvenue, CFA, CAIA from CalPERS, Katie Koch from The TCW Group, Tony Minella from Eldridge, and our moderator, Matt Brown from CAIS. I truly enjoyed our conversation and the opportunity to share and compare insights on the issues affecting our business.   From the generational amount of cash still sitting on the sidelines, to the rise of alternatives from being the subject of a mostly academic exercise to one that carries significant urgency for investors today, it was a privilege to share my thoughts and those of our clients on such an important stage. Milken offers a unique opportunity for our industry to talk openly about the challenges we face and opportunities we see in serving those who entrust us with their financial futures. And a conference like Milken reminds me of two fundamental truths that guide our firm through all market cycles and environments: access is what drives alpha for investors so it’s our job to find more ways to provide them with more of it, and if we focus on the things we can control and the fundamentals of what we do – investment excellence and world-class service for our clients – then we’ll be ready for volatile and uncertain market conditions. #MIGlobal

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I really think Soteria Market Inc. (founded by NYU Stern School of Business TRIUM alumn Ofer Shapira) is about to take off! This AI-driven platform matches buyers and sellers of distressed debt — a function that today is still done laboriously (and expensively) with investment bankers making phone calls. Soteria can create massively higher liquidity in this market, and can do it faster, cheaper, and with more precision. This will do for distressed asset trading what Mike Bloomberg did for bond trading. #fintech #AI #distresseddebt #innovation

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Small-Cap and Micro-Cap Emerging Managers: Seeking Alpha in Inefficient Markets https://lnkd.in/gTwPKE4Y #hedgefunds #finance #diversity #esg #venturecapital #emergingmanagers

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As the DOW Jones closed above 40,000 for the first time in its history, Olaolu Aganga recently joined the team on CNBC’s Closing Bell to discuss our playbook in alternatives and current strategic and tactical asset allocation views. Through what many have described as a “supercycle” election year, we see large asset owners seeking out stability in longer-term allocations to alternatives – including private credit and private equity. Typically marked to market at a slower rate, exposure to alternatives can provide important stability through more volatile periods. Balancing strategic and tactical decision making across portfolios is all about assessing risk and return relative to time horizon. Strategically, we’ve been neutral on Europe for some time, but tactically, we’ve been looking internationally to capture opportunities across emerging markets, most recently in China where we see valuation distortion. Join the Mercer Investments team and Olaolu Aganga LIVE in Nashville for the Global Investment Forum June 10-12: bit.ly/3Vm71yw

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Higher for Longer. That was the premise of our debt refinancing work we published a couple of weeks back and the recent macro data flow has generally supported this. Fed and Bank of England decisions, persistent services inflation and jobs market strength suggest the path of interest rates will reduce, but slowly. This means that the cost of debt financing will build significantly over time as refinancing takes place. We ran the numbers for the UK and the US. Assuming all debt refinances at projected market rates (and constant debt margin) and extending out to 2030, this will add £42bn onto company costs in the UK. I have enjoyed speaking to clients and media outlets and delighted with the interest in our work. Some of the questions have included… ❔ Is it really a cliff?  Yes, for certain firms a major refinancing is experienced as a cliff. But the timing is spread out, so it’s more of a “hump”, when viewed across the economy as a whole. ❔How big are these numbers? It’s always hard to put big numbers in context, but the total dividends of the FTSE350 are around £87bn, so this cumulative impact worth around half of FTSE 350 dividends (not a perfect comparison as our dataset also includes UK finance raising subsidiaries of international companies). That's still a big negative margin pressure. ❔Is this inflationary? Yes, in that some of these costs will be passed onto customers, but because refinancings happen at different times, its much harder for firms to pass on these costs (when rivals aren’t). This is different to the energy crisis when all costs jumped at once.  In overall terms higher interest rates are still deflationary by reducing demand in the economy. ❔What does this mean for finance departments?  One striking finding from our survey of finance executives is that they intend to utilise a broader range of financing products (e.g. index-linked bonds, hedging, even hybrids), so a higher interest rate environment will also be a more complex one. Great working with Damian Kerr Simon Gray Mark Crowhurst David FitzGerald and superb granular, instrument-level analysis by Akshay K. Plenty more findings in the link below. Baringa https://lnkd.in/ejxFHdc4

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The evolving world of financial benchmarks:

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While many participants have a solid understanding of some target date features, others may need some more education. Learn more about how participants are approaching TDFs. bit.ly/4a2nXO4.

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The downgrade reflects Kohl's continued EBITDA declines. The declines signal that the company may not be able to successfully execute an operating strategy to profitably defend market share in the secularly challenged department store space. Fitch views flattish revenue and EBITDA in the medium term as Kohl's best-case scenario. The company's recently reduced 2024 guidance suggests a rebased EBITDA of around $1 billion, below the $1.2 billion in Fitch's prior forecast.

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On May 15, join our defined contribution webinar where we'll provide an update on legislative, regulatory and judicial developments in the US retirement landscape, including a look at the adoption of SECURE 2.0’s student loan matching provision. #retirement #DefinedContribution #StudentLoans #investments

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It was great fun to be interviewed at #SuperReturn by my friend and advisor Jennifer Prosek of Prosek Partners. Speaking of super returns, at TCW we believe privately structured rescue investing could be an extraordinary opportunity for investors willing to commit long term capital. Regardless of how the macro plays out from here - the die has been cast for rescue - capital structures were put in place with an expectation that rates would stay zero forever. As the math takes over, there are a growing number of good companies with challenged liquidity, and our rescue capability allows us to step up and be a solutions and liquidity provider to those companies while delivering equity-like returns for our clients. Disclosure: https://tcwgrp.com/0qcnuq

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