Hyundai Investment Asset Management Establishes TALF Credit Fund Worth 600 Billion KRW

[Asia Economy Reporter Minji Lee] Hyundai Investment Asset Management announced on the 5th that it has launched a TALF Credit Fund utilizing the U.S. Federal Reserve's Term Asset-Backed Securities Loan Facility (TALF) program, in partnership with the U.S.-based private equity firm EMP Belstar (hereinafter Belstar).

The TALF program is a quantitative easing initiative designed to revitalize the U.S. ABS market, which is the driving force supplying liquidity to the U.S. consumer loan market (student loans, auto loans, credit cards, etc.) and has been tightened due to COVID-19 and other factors.

This fund was raised domestically, securing commitments of approximately KRW 600 billion from domestic institutional investors. The committed amount will be invested in AAA-rated ABS under the TALF program through a TALF-specialized overseas fund managed by Belstar.

Hyundai Investment believes that while the Fed loan interest rate is fixed at a low rate until the loan maturity (3 years), the interest received from the ABS purchased using the TALF program loans is formed at a high level, allowing for arbitrage opportunities.

A Hyundai Investment official stated, “In a situation where overseas investments by domestic institutional investors have slowed, we raised more funds than expected through an event-driven strategy that turned COVID-19 into an investment opportunity.”