Pimco: Delivering Returns
Company Profile
PIMCO is a global investment solutions provider with more than 1,400 professionals in 11 countries, focused on a single mission: to manage risks and deliver returns for their clients.
PIMCO manages investments for a wide range of clients, including public and private pension and retirement plans and other assets on behalf of millions of people from all walks of life around the world. PIMCO are also advisors and asset managers to companies, central banks, educational institutions, financial advisors, foundations and endowments.
The Situation
PIMCO is the largest bond manager in the world with over $12billion of exposure to the transportation sector. A significant portion of this exposure is enhanced equipment trust certificates (EETCs). They use an internal framework to evaluate portfolios of aircraft that utilizes third party valuation opinions to benchmark their own downside recovery estimates.
But, PIMCO did not have a access to the historical data needed to accurately measure volatility for specific aircraft types, which they believed is essential to accurately calculate risk adjusted returns.
The Solution
PIMCO turned to Ascend because its professionals were pushing well beyond its peers in mining its database and providing the type of analysis PIMCO were most interested in to better assess risks. Ascend’s Values Analyzer supplies PIMCO with current, future and historical values for 60 aircraft types. PIMCO uses it to understand expected aircraft depreciation over the course of a loan, based on projected depreciation curves and past value performance.
PIMCO also relies on Ascend’s Aircraft Ratings to provide objective and reliable assessments of the risk adjusted returns it is earning on both its existing portfolio and on potential new bond purchases. Ascends data and ratings assessments are used in conjunction with PIMCOs own modelling techniques to arrive at reliable and creditable valuation forecasts.
The Benefit
David Andrews, EVP at PIMCO, says that, “We chose Ascend’s risk management data as no other company provides reliable historical volatility data. Ascend are aviation experts; we are confident using them to test and validate our own assumptions about aircraft investments and to make recommendations to portfolio managers.”