A Changed Investment Landscape Is Providing Greater Opportunity for US Corporate Pensions

Over the past decade, executives overseeing corporate defined benefit (DB) pension plans have experienced significant regulatory reform and a full reversal of investment conditions. While rising liabilities once offset asset gains, the opposite is now true. Yet many organizations haven’t recalibrated their approach to plan management in response, leaving them exposed to unnecessary costs and […]

January 2024

2024 Outlook: Credit

We expect direct lending and European opportunistic private credit funds will outperform their long-term averages because of high asset yields and the pull back in credit availability among traditional lenders. We like structured credits, particularly high-quality collateralized loan obligation debt, and we expect high-yield bonds will outperform leveraged loans. But we remain neutral on high […]

December 2023

Credit Score: Why Bank Retrenchment Spells Opportunity for Pensions

A down year in public markets led to a severe slowdown in new debt issuance in 2022, resulting in increased pressure in the banking sector. During the first half of 2023, the collapse of three US regional banks—in addition to the collapse of Credit Suisse in Europe—led to a further slowdown in bank lending. In […]

August 2023

Is Now a Good Time to Allocate to Private Credit Strategies?

Yes. Despite elevated macro uncertainty, it is an opportune time to allocate to private credit. Rising interest rates, reduced competition from traditional lenders, and improving documentation mean these should be attractive vintages for direct lending. In a similar vein, credit opportunities funds are finding rich pickings thanks to growing risk aversion, rising distress, and the […]

July 2023

Private Direct Lending or Public BDCs? Guidance for Pension Plan Sponsors

Private credit has become a popular asset class among pension plan sponsors seeking yield enhancement over their public fixed income allocations. The non-bank finance market has flourished since the Global Financial Crisis due to a more restrictive bank regulatory environment, resulting in reduced bank lending activity, and a wide range of private credit opportunities are […]

July 2023

Liquidity Hazard Planning for Families of Wealth

Families of significant wealth can experience sustained periods of time where liquidity is not a foremost priority. Demands for liquid capital can rapidly emerge, however, like the sudden onset of the COVID-19 crisis in March 2020, and cause trouble for the unprepared. In the worst-case scenario, investors may need to sell growth-focused assets during a […]

July 2023

Private Credit: Opportunities Abound

A robust opportunity set for credit opportunity funds has emerged thanks to a constellation of factors. Rising interest rates, a retrenchment of bank lending appetite, and an expected economic downturn have combined to increase borrowing costs for stressed issuers and create a broad distressed opportunity. Investors that commit capital to funds this vintage year are […]

June 2023

Investors Should Direct Their Attention to Private Lending

We believe now is an opportune time to allocate to direct lending. Dislocation in the public leveraged finance markets has allowed direct lenders to increase credit spreads and tighten terms. This, coupled with higher interest rates, means that first-lien senior-secured debt is now yielding low double digits. Recent turmoil in the banking sector may only […]

March 2023