Separate Account Private Placements
A private placement is a debt security that is exempt from registration with the Securities and Exchange Commission (SEC) under Regulation D of the Securities Act of 1933. Privately placed debt encompasses a wide variety of fixed income investments including corporate obligations, real estate related, project finance and asset-backed loans for midsize to large companies. It is a large market, with more than $30 billion of investment grade debt issued annually.
Privately placed debt provides an enhanced yield over comparably rated public securities as well as access to issuers that are not available in the public market. The yield advantage of private placement bonds generally equates to an increased spread of 10 to 50 basis points, along with more restrictive covenants or security than comparably rated public securities. The different issuers also provide some issuer and geographic diversification to the overall portfolio.
For those clients seeking a stand-alone private placement allocation, AAM maintains a relationship with Advantus Capital Management (“Advantus”), an affiliated company within the Securian Financial Group family. Advantus brings nearly a 30-year track record investing in the private placement market with considerable infrastructure in underwriting and legal to support initial due diligence and ongoing oversight.