Private Credit

Longer retirements can support continued allocations to private markets, but decumulation places greater emphasis on cashflows, liquidity and the ability to respond to changing member needs.

Insurers may have been hesitant to embrace private markets, but the attributes of private credit and other asset classes are leading to larger allocations.

Private credit’s rapid expansion has firmly moved it from the margins of alternative finance into the mainstream of pension scheme portfolios.

Ontario Teachers’ latest platform agreement with M&G illustrates how an increasing number of the world’s largest institutional investors are building deeper, longer-term partnerships with specialist managers to improve alignment, access and scalability.

As insurers’ strategies become more sophisticated, success will increasingly depend on scale, expertise and technology.

Private credit secondaries are growing rapidly, with the strategy’s appeal extending beyond discounts, offering investors greater portfolio visibility, faster deployment and reduced J-curve effects.

As direct lending matures and defaults begin to rise, institutional investors are placing greater emphasis on underwriting discipline, workout capabilities and manager specialisation.

Moody’s believes long-term growth remains intact as the asset class evolves into a broader financial ecosystem.

As private credit markets expand, institutional investors are looking beyond traditional direct lending strategies and paying closer attention to portfolio construction, liquidity management and manager selection.

Roman Hederer explains how the UK insurer is adapting its annuity strategy through private markets, productive finance and new sourcing partnerships.

Institutional investors remain committed to private credit despite mounting scrutiny of the asset class, but are becoming more selective around underwriting standards and manager quality.

Private credit continues to offer attractive risk-adjusted returns, but manager selection and underwriting discipline will become increasingly important.