Thrivent Financial for Lutherans, a financial services company with $60 billion under management, is considering setting up a dedicated vehicle to purchase private placement structured finance bonds. The firm may set up a separate pool of assets to invest in Rule 144a securities such as collateralized debt obligations and catastrophe bonds next year, says Scott Lalim, manager of a $1.5 billion asset-backed liquidity portfolio. He says the new portfolio would likely be roughly $500 million, and would be formed by a reallocation of some existing assets and new money. "We would be looking at investing in things that could add some value and may be slipping through the cracks," he says, adding, "I think it will be an exciting area for us."
Not surprisingly, dealers are excited about the prospect of a new buyer. One CDO sell-sider says, "New money is always interesting."
Thrivent, based in Minneapolis, is surveying factors such as whether there are enough available short-term bonds to justify creating a dedicated portfolio of private assets. Lalim says the company is thinking about this now because the market for private structured bonds has matured and offers a spread pickup to other short-term bonds, such as asset-backeds. "We have a lot of use for short-duration securities in our general account, and this might be a way to take on liquidity risk in more of a buy-and-hold portfolio," he says, noting Thrivent would probably maintain an average duration of 2.5 years.
The firm was formed in 2001 by the merger of Lutheran Brotherhood and Aid Association for Lutherans. "As we are emerging, we are taking a look at how we are backing our liabilities and some alternatives as to how we could add some value," he explains. If it does decide to go ahead with the plan, Thrivent could add some staff to perform credit analysis, Lalim adds.
