The Treasury Department has announced the initial closings of Public-Private Investment Funds (PPIFs) established under the Legacy Securities Public-Private Investment Program (PPIP).
As of Wednesday, Invesco Ltd.'s Invesco Legacy Securities Master Fund LP and The TCW Group Inc.'s UST/TCW Senior Mortgage Securities Fund LP had completed initial closings, each with at least $500 million of committed equity capital from private investors.
To date, collectively the PPIFs have closed on approximately $1.13 billion of private-sector capital commitments, which the Treasury has matched, representing total equity capital commitments of $2.26 billion.
The Treasury will also provide debt financing up to 100% of the total capital commitments of each PPIF, representing approximately $4.52 billion of total equity and debt capital commitments.
Invesco and The TCW Group are two of the nine companies that the Treasury pre-qualified as fund managers under the Legacy Securities PPIP.
The Treasury expects that the remaining seven initial closings for the other PPIFs will occur throughout this month. Following an initial closing, each PPIF will have the opportunity for two more closings over the following six months to receive matching Treasury equity and debt financing, with a total Treasury equity and debt investment in all PPIFs equal to $30 billion ($40 billion including private-sector capital).Â
The PPIP is designed, in part, to support market functioning and facilitate price discovery in the commercial and non-agency residential mortgage-backed securities markets. In its announcement about the initial closings, the Treasury notes that while financial market conditions have improved and the prices of legacy securities have appreciated, causing the Treasury to shrink cost projections for the pgoram the Treasury remains prepared to expand the amount of resources committed to PPIP should conditions deteriorate.
SOURCE: U.S. Treasury Department