The roughly $31 billion Oregon Public Employees' Retirement System, in an effort to build upon its investment in distressed debt, has awarded a $75 million mandate to Oaktree Capital Management. Jay Fewel, senior equities investment officer, said Oregon chose to invest with Oaktree because the pension plan has a long-standing relationship with the firm that stretches back to the early 1990s. The mandate, which was awarded early last month, will be invested through Oaktree's $1 billion OCM Opportunities Fund IV-B, he noted. Officials at Oaktree declined to comment.
Oregon decided to add to its distressed debt holdings now because it sees opportunities. "All you need to do is pick up the paper to see that there are a lot of companies in trouble," Fewel said. The pension plan sees its investments in distressed debt as an equity play, he noted, explaining that individual investments are usually worked out through a debt-for-equity swap.
Although Oregon has no specific allocation to distressed debt, its investments in the subsector are part of its alternatives allocation, which is currently about 12%, Fewel noted. In addition to Oaktree, the pension plan invests in distressed debt with Credit Suisse Asset Management, but Fewel declined to say how much is run by each firm. Oregon currently is looking at the possibility of adding other managers to the mix, but whether it does and when will depend on market conditions, he said, declining to elaborate further.