News Digest:

Pension plans’ reliance on private credit continued with assets of 200 of the largest such plans growing by 12.5% to $98 billion over the twelve months ended September 30, says a published report. This despite the fact that some asset owners reported falling portfolios during this period.

Rising interest rates are expected to benefit private credit managers with floating-rate debt though there could be a large number of LPs that could be less than pleased about the returns of the current funds because of these very rates.

Takeaway:

Cash flows and interest payments of enterprises get affected by rising interest rates, The Cliffwater Direct Lending index that represents $260 billion in private credit assets, returned 6.6% for the twelve months ended September 30, as against 14.25% a year ago. Credit managers with fixed-rate loan portfolios that fail to adjust to interest rate hikes have seen a drop in returns over the past year.

End Notes

Source: https://www.pionline.com/alternatives/private-credit-remains-growing-part-pension-plan-portfolios