Kentucky commits $76m to debt, secondaries funds

The $11.5bn pension is facing a 'severe' liquidity crisis and is looking to credit opportunities to provide much-needed cash flow.

Kentucky Retirement System, which is facing a “severe unfunded liabilities situation”, committed $50 million to Commerce Street Income Partners Fund II to take advantage of debt trading at distressed prices.

The pension hopes the debt opportunity will be a way to “add income to the fund”, which is in a “negative cash flow situation”, according to Adam Tosh, chief investment officer for the $11.5 billion Kentucky Retirement System.

“We have … benefits payments we have to make and a very severe unfunded liabilities situation here in Kentucky” Tosh said.

Commerce Street, established in 2007, is an investment bank that manages funds in the banking and financial services sector.

The pension also committed $26 million to the Camelot Acquisitions: Secondary Opportunities fund, which is targeting $250 million to $300 million.

The Camelot Group is an investment and advisory firm that provides advice to institutions, corporations, partnerships, governments and individuals in the alternative asset and private equity industries.

Kentucky has a nearly 12 percent allocation to private equity. The pension has seen its assets plunge from $19.3 billion on 30 June 2008.