NEWPORT BEACH, Calif., Nov. 28, 2001 (PRIMEZONE) -- PIMCO, long recognized as one of the world's leading fixed-income fund management companies, has now been acknowledged as a preeminent manager of collateralized debt obligations (CDOs) -- pools of bonds that are sliced into securities with different risk levels and sold to investors.
Once considered a novelty investment, their importance is now recognized throughout the investment community; in April of this year, Federal Reserve Chairman Alan Greenspan told the Bond Market Association that CDOs were an important source of AAA-rated substitutes for "increasingly scarce Treasury debt." On October 31, the Treasury announced that it would stop selling 30-year Treasury bonds.
In an inaugural publication analyzing the CDO market, Standard & Poor's (S&P) has concluded that PIMCO is "one of the industry's most effective high-yield CDO managers." In fact, PIMCO was one of only two CDO managers highlighted in the new publication, which is being distributed globally.
"This report fills a clear need," said Ray Kennedy, PIMCO Executive Vice President. "Despite the increasing importance of CDOs, there has until now been little or no available performance data for collateral pools."
"CDO structures are complex and, therefore, difficult for investors to track," said David Tesher, S&P Managing Director, Structured Finance. "In the past, most CDO investors would have to do site visits as a part of their due-diligence process. Those visits may not be cost-effective given the proliferation of high net worth individuals in this sector. Now, S&P is able to provide an efficient tool for investment analysis."
S&P concluded that PIMCO's "fixed-income background and particularly its high-yield credit experience is a key ingredient to the successful management" of CDOs. According to the S&P report, PIMCO's "history, technology, and the depth of dedicated investment professionals are key attributes to asset growth and sustainability" of its CDO offerings.
"S&P came to that conclusion after conducting a thorough review of PIMCO's CDO business," said Powell Thurston, PIMCO Vice President. Three senior S&P analysts spent several days examining PIMCO's investment philosophy, management style, operational capabilities and audit processes, as well as such aspects as the stability of its portfolio management team.
By pooling together bonds of different classes, CDO managers can offer their investors diversified credit exposure and potentially higher returns than would be offered by direct investment in leveraged assets -- as well as less market risk.
Furthermore, CDOs are non-recourse structures, so an investor can lose no more than his or her initial investment. Investors in direct leveraged investments are liable for all losses.
PIMCO manages 16 CDOs with a total par value of $5.25 billion in three asset classes: high yield, investment grade and asset-backed. And with deep resources in the emerging market sectors and the company's acquisition last year by Allianz, PIMCO is well positioned to manage emerging markets and European corporate CDOs.
With more than $235 billion in fixed-income assets under management in the United States and an additional $85 billion in insurance-based assets under management in Europe, PIMCO is one of the world's leading fixed-income fund-management companies. Founded in 1971 and based in Newport Beach, California, the company is majority owned by Munich-based Allianz Group, a leading global insurance company with nearly $985 billion in assets and represented in 70 countries around the globe.
Except for the historical information and discussions contained herein, statements contained in this news release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may involve a number of risks, uncertainties and other factors that could cause actual results to differ materially, including the performance of financial markets, the investment performance of PIMCO's sponsored investment products and separately managed accounts, general economic conditions, future acquisitions, competitive conditions and government regulations, including changes in tax laws. Readers should carefully consider such factors. Further, such forward-looking statements speak only on the date at which such statements are made. PIMCO undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.