Blackstone's Betting on Interest Rates Rising: Rice

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Oct. 23 (Bloomberg) -- Bob Rice, general managing partner with Tangent Capital Partners, discusses Blackstone's expansion drive with Deirdre Bolton on Bloomberg Television's "Money Moves." (Source: Bloomberg)

A busy news week as far as headlines go.

There is some important signals being sent right now to the rest of the investment community that may be does not have 250 billion dollars.


They did three things this week, all of which were noteworthy.

The most recent news is that they are to start securitizing the rental income they are getting from those 40,000 homes they bought over the last couple of years.

Blackstone is now the biggest landlord in the u.s. and it is interesting to see what they were doing.

We used to see mo's as investment the aprils but these are like -- as investment vehicles but these are like cro's. these actually could be superior , at least in terms of financial characteristics because they have the ability to have interest rates, as interest rates rise, for payouts to rise, which would be a distinction to most fixed-rate mortgages.

Also these would not have prepayment risks in the same way.

It is a fascinating kind of investment that is going to come onto the scene.

That was part one.

They have done something with longevity.

The goldman sachs insurer in the u.k.. what is cool about it is to see what kind of insurance they were buying into.

They were buying into a provider of so-called longevity risk insurance.

If you run a pension plan, you have to make payments.

You have all of these -- actuaries are figuring out when we are going to die.

Exactly right.

If we live longer than expected, the manager of the pension plan has a problem because he does not have the assets to pay out.

So he buys longevity risk insurance.

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