Latest institutional insights

Welcome to our Canadian Insurance Newsletter, where we deliver insights on industry trends, regulatory updates and investment strategies relevant for insurance professionals.

The transformational power of artificial intelligence is driving unprecedented levels of investment in digital infrastructure to support the needs of tomorrow’s economy. 

Strong October issuance led to a strong fourth quarter of 2024. Meanwhile, business development companies (BDCs) continue to grow as potential opportunities for IG private credit investors.

In this issue, we discuss the uncertainty caused by trade tensions, some cooling in shelter prices and effects of the Canadian government’s tax moves.

Welcome to SLC Management’s investment outlook for 2025. In this report, our investment teams and solutions providers discuss public and private fixed income, real estate, infrastructure, insurance asset management and retirement plans.

Amid continuing pressures on social infrastructure, SLC Management discusses investor opportunities to enhance returns, while advancing public interest initiatives.

Welcome to our Canadian Insurance Newsletter, where we deliver insights on industry trends, regulatory updates and investment strategies relevant for insurance professionals.

Fund finance, which includes strategies such as net asset value (NAV) lending, has become a fast growing tool employed by asset managers seeking financing and for institutional investors seeking potential risk–return benefits. Gain further insights from our investment team: 

Liability-driven investment (LDI) programs often face a tradeoff between hedging liabilities and enhancing diversification, among other competing goals. In our latest investment team insights, we discuss how investment grade private fixed income can help solve the conundrum.

In this issue, we discuss cooling inflation, price softness across several CPI categories and alternatives to RRBs in inflation hedging.

With investors increasingly looking into the potential benefits of NAV lending, SLC Management takes a closer look at this asset class.

In this issue, we discuss cooling inflation, decreasing liquidity in real return bonds (RRB), and alternatives to RRBs in inflation hedging.

Welcome to SLC Management’s investment outlook for the mid-year point of 2024. Learn more about what our investment teams and solutions providers expect for public and private fixed income, real estate, infrastructure, insurers and retirement plans.

SLC Management joined this year’s Pensions & Investments Canadian Pension Risk Strategies (CRISK) events to share insights and help institutional investors navigate the complexities of private markets.

In this issue, we discuss cooling inflation, decreasing liquidity in real return bonds (RRB), and why the cost of implementing a U.S. based inflation strategy has increased.

Market statistics for the private placement market sourced from Private Placement Monitor, a standard proxy for the IG private credit market.

Robust volumes, greater demand from a growing investor base and tightening spreads characterized private credit during the first quarter. New investors coming into the market has also led to increased market capacity and larger deal sizes. Meanwhile, fund finance has emerged as a growing, evolving sector for institutional investors looking for potential diversification, investment premiums and risk managed performance.

At the beginning of 2024 there was little solid consensus on the direction of interest rates. Expectations for federal bank actions ranged from rate decreases for earlier in the year to rates remaining high until at least 2025. Such uncertainty can make things difficult for fixed income investors, as in many cases bond yields are highly correlated to interest rates.

Investment grade (IG) private credit volume in Q4 2023 was the strongest for the year at US$28.6 billion, bouncing back from US$14.1 billion in Q3 2023, the lowest quarterly volume of the year. While we won’t know final results for a few months, preliminary 2023 volume of US$90.7 billion fell short of US$92.3 billion in 2022. Issuers that had something to get done came to market in the last quarter and investors responded positively. This was in contrast to much of 2023 when issuers were put off by high rates or market uncertainty and investors were either less liquid or more cautious immediately after the failure of Silicon Valley Bank.

Welcome to SLC Management’s investment outlook for 2024. In this report, our investment teams and solutions providers discuss public and private fixed income, real estate, infrastructure, insurance asset management and retirement plans.

In this issue, we discuss accelerating core inflation measures, decreasing liquidity in real return bonds (RRB), and why market conditions have improved for implementing a U.S. based inflation strategy.

A volatile economic and market environment has led to increased interest among institutional investors for more diversified credit exposure. One segment of the credit market that’s often overlooked is the narrowly syndicated credit (NSC) space, which can offer the potential for higher yields with reduced volatility characteristics.

In this issue, we discuss the continued increase in headline CPI, a burst in RRB trading volume in Q3, and why implementing a U.S. based inflationary strategy could be expensive for Canadian investors.

In a slow quarter for the investment grade (IG) private credit market, robust industrial and utility sector issuance helped support volume amid decreased financial issuance. We are seeing a possible turnaround in decreasing IG private credit demand to date as markets begin to adopt “higher for longer” rate expectations. Meanwhile, we are taking a closer look at infrastructure debt investments amid increased focus on the diversification, risk management and other potential benefits of the asset class.

In this issue, we discuss the unexpected increase in headline CPI in July and the significant decrease in RRB trading volume.

Issuance of investment grade private credit (IG private credit) proved resilient in Q2 2023, with the market providing some respite during uncertainty in the public debt space. H1 2023 issuance, however, is still behind that of the same period last year, largely due to a decrease in volume in financials. Amid other promising sectors, we see potential value in asset-backed securities (ABS), in particular senior IG ABS. From a volume and return perspective, 2023 could be an especially strong year for ABS investors, in our view.  

Welcome to SLC Management’s investment outlook for mid-year 2023. In this report, our investment teams and solutions providers share their insights, analyses and perspectives on public and private fixed income, real estate, infrastructure, insurance asset management and retirement plans.

Issuance for 2023 started off on a strong footing with robust volumes in Q1, which was down somewhat from 2022 but stronger than 2021 for the comparable time periods. Financial issuance for Q1 2023 was down significantly year over year, but was partially offset by strong robust volumes from industrial, utility and transportation. With continuing uncertainty around the market – from inflation, interest rates and turmoil in the banking sector – investment grade private credit (IG private credit) is exhibiting the risk/return characteristics investors might be looking for.

In this quarter's issue, we discuss the decrease in headline CPI year-over-year and provide an update on the active secondary RRB market.

On March 28, Finance Minister Chrystia Freeland tabled the federal budget in the House of Commons. The budget contained an unexpected new tax measure for dividends that directly impacts financial institutions, including insurance companies.

We are pleased to present SLC Management’s investment outlook for 2023. This report reflects the diverse viewpoints of our investment teams and solutions providers, with analyses of public and private fixed income, real estate, infrastructure, insurance asset management and retirement plans.

Steve Guignard, Senior Director of Client Solutions discussed the merits of alternative fixed income at the Canadian Investment Review’s Investment Innovation Conference. 

Following the Government of Canada’s decision last week to cease issuance of real return bonds (RRBs), we’ve spoken to a number of dealers to understand the impact of this move. More broadly, we’ve heard that the overall tone is less liquidity, and dealers anticipate less trading. In a few cases, we’ve heard of index fund managers rebalancing their portfolios (primarily trading 50s and 54s). Some dealers’ clients commented that if there were distressed sellers, they would be better buyers. However, there have been no distressed sellers. Overall, recent weeks have been very quiet for RRBs.

Yesterday’s announcement about real return bond issuance was shocking and we’re writing to share thoughts from Steve Morris, Senior Managing Director & Portfolio Manager and Ashwin Gopwani, Managing Director and Head of Canadian Client Solutions.

Much has been written about the trend towards passive management and it has merits in many market segments, particularly those where the opportunity to add value is limited. However, we believe there are a number of structural reasons for favouring an active approach within investment grade fixed income allocations.