The multi-employer pension scheme for higher education workers in the UK said long-dated derivatives were becoming expensive for counterparties to roll over with banks when break clauses are reached.Yorkshire Water’s break allowed USS to offer an alternative, adding an inflation match in the scheme’s liability-driven investment (LDI) portfolio.Ben Levenstein, head of private debt and special situations at USS Investment Management, the scheme’s in-house asset manager, said it restructured Yorkshire Water’s inflation swap to match its own requirements.“We got to a situation where both parties were happy with the predicted stream of cash flows from the new swap put in place,” he said.USS, which has 7.4% of its assets in LDI, purchased long-dated inflation swaps from Yorkshire Water that mature in 2063.It also removed any further break clauses.Levenstein said USS began discussions with the water company a year ago, knowing it would require inflation-linked financing.Water companies in the UK are owned privately, but their revenues are regulated by the government and include annual adjustments in line with the retail prices index, the same inflation measure used by USS to increase pensions.He said the scheme was keen to continue sourcing direct inflation-swap deals with companies that require counterparties with a longer-term perspective.“We are very keen to explore new opportunities,” he said. “USS is perfectly suited to this sort of investment with inflation and duration exposure.“There have not been many of these transactions before, so we have developed the process to undertake ones like this.”USS declined to comment on the structure of the deal, including whether the swap was collateralised.Levenstein, however, said Yorkshire Water was a “strong” counterparty.The pair set up a special-purpose vehicle, Aysgarth Finance, to manage the swap’s cashflows.Earlier this year, Yorkshire Water announced it held £2bn in inflation swaps, with further breaks in 2018, 2020, 2023 and 2025 but plans in place to manage the breaks in 2018.Yorkshire Water said its inflation-linked derivatives portfolio was putting pressure on the company’s credit quality, downgraded recently by Moody’s. The £49bn (€67bn) Universities Superannuation Scheme (USS) has become a direct counterparty to a UK utility company in an inflation swap used to manage liabilities.Inflation swap derivatives are normally run through banks that act as counterparties to both sides.The cost of managing these transactions, however, has increased due to banking regulation since the financial crisis.The deal with Yorkshire Water, thought to be worth more than £130m, was arranged when the company’s previous swap deals approached a break clause – where banks and customers often renegotiate the pricing of derivatives.
“Moreover, such a construction would increase the exposure to US equity, including the uncertainty posed by the upcoming presidential elections,” it said, adding that it would incur a cost of a couple of basis points as a result of the transaction.The metal scheme further made clear that it had kept its investment portfolio “as neutral as possible” by keeping the scale of its asset classes closely to the centre of pre-set bandwidths.The pension fund said it expected to benefit from its decision last year to reduce the hedge of the US dollar from 75% to 50%.It added that it expected the currency to appreciate against the euro, “as investors are likely to flee into the ‘safe haven’ of the greenback in the event of a Brexit”.Early last year, PMT reduced the dollar hedge in anticipation of a possible Grexit.The metal scheme emphasised that the possible effects of a Brexit were unclear, but it predicted pensions would be affected if coverage ratios were to fall as a consequence of turbulence on the financial markets.“The main question is what the scale of the volatility would be and for how long it would last,” it said.The €417bn asset manager APG declined to comment on whether it had adjusted its hedge of the main currencies.Spokesman Harmen Geers said APG had anticipated the possible consequences of a Brexit by ensuring it had sufficient liquidity available as collateral in the event of currency movements.He added, however, that the large Dutch pension funds, with their broad investment portfolios, could hardly be immune to the effects of a Brexit. PMT, the €63bn pension fund for the metalworking and mechanical engineering sector in the Netherlands, said it has refrained from taking short-term measures to reduce the potential negative effects of the UK’s leaving the EU.The scheme said the protective measures available would prove too costly if the UK were to decide to remain in the EU in today’s referendum. It said it had the option of moving assets from its return portfolio to its matching portfolio but that it had considered that an overweighting of its matching holdings would result in lower returns if the UK voted to remain within the EU.PMT also said that “exchanging returns” on British equities for those on US equities through future contracts could negatively impact overall returns if the UK remained.
Flavien Prat135 $328,997 38% 48% $267,807 $236,867 $605,602 8 5 5 (Current from April 12 through Saturday, June 22) $270,315 46% 9 17% 44% 14% Brian J. Koriner34 ITM% 8 $1,108,316 16% ITM% $669,456 $1,116,412 46% Martin Garcia70 35% $1,309,672 21 7 Mario Gutierrez81 6 14 1 21 58% 17 15% $433,626 27% 5 $214,586 19 $363,694 $557,048 10 45% OH, ZUZANNA! QUITE A RIDE TO CLAIMER OF MEET 5 $1,322,467 13 44% $337,546 14% $788,082 16 10 6 51% 9 1st 38% Agapito Delgadillo46 49% Drayden Van Dyke112 21% 57% 10 6 3rd $733,924 19% 3 $648,322 6 6 14 29% 10 6 14 2 14 $1,018,975 3 7 5 5 11 16% 7 BAFFERT BREEZES McKINZIE FOR WHITNEY STAKES 12 24 20 6 Norberto Arroyo, Jr.70 11 19% Heriberto Figueroa48 11 47% 15 54% 16% 14 Kent Desormeaux72 10% 37% George Papaprodromou26 22 SANTA ANITA STATISTICS $821,278 16% 5 Edwin Maldonado79 4 3 12 6 7 17% 22% 46% Mike Smith26 $1,262,016 5 2 19% $902,506 29 $480,419 $303,859 12 TrainerMts 10% Robert Hess, Jr.30 18 10 4 $2,202,197 30 9% 40% Geovanni Franco94 27 $159,266 2 Steven Miyadi32 $439,837 15 56% $668,870 6 21% 15% 5 44% 21 Tim Yakteen17 19 John Sadler67 8 23% 38% 2nd 23 7 14 22% 44% 12 13 23 21% 9 5 17 19% 1 43% 8 15% 1 24% $173,004 John Shirreffs27 Bob Baffert41 7 16 50% 14 68% 10 7 Martin Pedroza42 Money Won Joseph Talamo125 15% 40% 30 Vladimir Cerin49 49% 3 Rafael Bejarano140 Win% 7 Steve Knapp34 48% 50% 14 $1,428,983 52% 6 Andrew Lerner16 18 18% William Spawr24 6 Mark Glatt81 45% 5 Victor Espinoza60 15 3 J. Keith Desormeaux34 $208,754 47% 57% Carla Gaines25 $775,570 Richard Mandella30 $667,323 6 $773,529 16% THERE’S NO PLACE LIKE HOME FOR TRAINER CECIL 43% $255,598 6 25% 6 JockeyMts 3 43% 0 Tiago Pereira136 51% Doug O’Neill115 59% Money Won 15% 20% 10 Ruben Fuentes108 Richard Baltas81 3 Win% Leonard Powell26 14 11 15 2 Philip D’Amato86 Jerry Hollendorfer53 1st 5 6 17% 9 18% 64% 5 22% 19% 3 54% 6 FAIRYTALE COMES TRUE FOR TEAM ZUZANNAIt’s been a storybook ride the last three months for the five-year-old mare Zuzanna.Claimed for $8,000 on Sept. 13, 2018 by a partnership group that includes TVG host and analyst Kurt Hoover, the bay daughter of Wilburn won three of four subsequent races, the most recent yesterday’s second at Santa Anita, a $46,000 starter allowance at a mile on turf.Coming from seventh and last, Zuzanna won by a length and a half under Kent Desormeaux, who has ridden her to two of her last three victories, with one second. The win earned her honors as Claimer of the Meet in Santa Anita’s annual media poll.“She’s a doll to ride,” Desormeaux said Sunday morning at Clockers’ Corner, giving considerable credit to her trainer, Bob Hess Jr., with whom the 49-year-old Hall of Fame rider has enjoyed remarkable success through the years dating back to the early 1990s, winning nearly 38 percent of the time on mounts conditioned by Hess.“The race she lost (second by 1 ¼ lengths going a mile and an eighth on May 24) was probably her best effort with me, because there was always a target,” Desormeaux continued. “But even when she lost, she ran wild, she ran awesome; the winner just outran her that day.“She showed her tenacity yesterday because she had to make a long run. When we left the gate, we went about 50 yards and I could hear the water squeezing out of the course from the two days of rain we had. It wasn’t really rain, but it was misty those mornings.“So I was content to sit back there, and sure enough the field came back to me. She caught them, too, but in all the turf races the last two days, the winner came from last except in yesterday’s final race. So Zuzanna proved to be in the right spot, and she did the rest.“Bob’s done a fabulous job with her.”Addressing his success with Hess, Desormeaux was succinct. “I’m grateful to him for having the respect to put me on horses he likes,” Kent said. “My brother (trainer Keith Desormeaux) tries to do the same thing, but quite honestly, he tells me to my face, ‘Anybody can ride and win on Exaggerator. I need you to help me out on the ones that are not that good.’“It’s funny the way he put it, but it makes me understand that sometimes it’s important to get fifth on a horse.”Before Saturday’s races, Desormeaux was one of several Hall of Fame jockeys past and present who participated in a trackside benefit for the Permanently Disabled Jockeys Fund, which was later followed by a luxurious luncheon.“The banquet was more impressive to me,” he said, “because we were all rubbing shoulders. Even my jaw dropped seeing some of the people I idolized as a young rider–Bobby Ussery, Braulio Baeza, Steve Cauthen.“I didn’t know them all very well; I just knew their stories, but to have Steve Cauthen there made me feel really, really good just to be a part of it.”BRIT SHOWS HIS WIT AFTER ROYAL ASCOT VISITTrainer Ben Cecil is back stateside after a recent visit to his native England. “It was a pleasure trip,” Cecil said. “I went to see my family and all my friends, and also took the occasion to attend the races at Royal Ascot on Tuesday, Wednesday and Thursday.“Being there is like nothing else. If we could bring a bit of that here, it would be great.”Cecil made hay at Santa Anita while the sun was shining across the pond.“I had two winners here while I was gone,” he said, “one last Friday and one the following Friday.”Mentioned maybe he should stay away, Cecil laughed and said, “I’m thinking about it.”FINISH LINES: Multiple grade I winner McKinzie worked four furlongs Sunday in 51 seconds for Bob Baffert who has him ticketed for the $1 million Whitney Stakes at Saratoga on Aug. 3. On the three-year-old front, Baffert has Affirmed Stakes winner Mucho Gusto headed for the July 20 Haskell at Monmouth and Game Winner to the Aug. 24 Travers at Saratoga. Meanwhile, Omaha Beach, the pre-race favorite for the Kentucky Derby, continues to near his first breeze since being declared from that May 4 race by jogging and galloping at Santa Anita for Richard Mandella . . .The racing community offers condolences to family and friends of owner/breeder John Toffan, who died after a lengthy illness last Monday at his home in Hidden Hills, CA., according toDaily Racing Form. He was 83. Partnered with the late Trudy McCaffery, they won the Santa Anita Derby with Free House in 1997 and Came Home in 2002. Other stakes winners they campaigned included Bien Bien, Bienamado, A.P. Assay, Bosque Redondo, Del Mar Dennis, Elaborate, Mane Minister and Pacific Squall. McCaffery died in 2007. Their trainer was Paco Gonzalez, since retired . . . Condolences also to family and friends of longtime owner/breeder Jim Ford, who passed away at 75 June 14 in Rancho Santa Fe, near Del Mar. His What a Spell, trained by Craig Lewis, became his first stakes winner when he took the 1991 Baldwin Stakes here and the highlight of his racing career came when Ticker Tape, an English-bred filly trained by Jim Cassidy, won the Grade I American Oaks in 2002 at Hollywood Park . . . Norberto Arroyo Jr. has been suspended three days (June 29, 30 and July 4) for causing interference on Street Imagein Friday’s first race . . . Santa Anita offers simulcast wagering this Thursday and Friday with free General Admission and free parking. Admission gates open at 10 a.m.LATEST CONTENT FROM XBTV: McKinzie works 4 furlongs. 6-23-19 (Baffert)Chasing Moments works 3 furlongs. 6-23-19 (Sherlock)Via Egnatia (Outside) and Morse Code works 5 furlongs. 6-23-19 (Baltas)XBTV Sunday: What to Watch for at Santa Anita Park on June 23rd, 2019.Shedrow Stroll: Phil D’Amato’s accomplished Turfer Tiny Tina.Shedrow Stroll: Phil D’Amato’s graded stakes winner Air Strike.Shedrow Stroll: Phil D’Amato’s graded stakes winner Bowies Hero.Shedrow Stroll: Phil D’Amato’s turf sprinter Master Ryan.Quick Questions: With Trainer Dan Blacker.Tequila Sunrise works 4 furlongs. 6-21-19 (Baltas)Rafal works 4 furlongs. 6-21-19 (Baffert)Grade 1 placed Ahimsa works 5 furlongs. 6-21-19 (Eurton)Multiple stakes winner American Anthem works 6 furlongs. 6-21-19 (Baffert)Bellafina works 4 furlongs. 6-22-19 (Callaghan)Flor De La Mar works 4 furlongs. 6-22-19 (Baffert)Scrappy Deville works 4 furlongs. 6-22-19 (Powell)Baby Ice (Outside) and Platinum Equity works 4 furlongs. 6-22-19 (Knapp) 22% 13% Jorge Velez68 $271,509 10 $282,946 12 $926,351 19% 50% 11 Aaron Gryder89 $1,239,901 12 3rd 2nd 2 17 10 $216,677