Interesting read on hot topics in the private credit sector,
including possible regulatory oversight concerns and potential
stress on insurance and pension funds due to tensions in the
secondary market. There is always risk in investing (whether large
industry or individual), but this article details nuanced points
particular to the private creditor sector around liquidity concerns
that should be especially interesting to those who follow
investment strategies of insurance companies and pension plans and,
more generally, to those gauging potential impact of a higher
interest rate environment.
This brings to mind some of my prior work with insurance companies
that had invested in real estate pre-'08 (e.g., office
buildings), only to find after the 2008 crash some of those
investments distressed to the point of bankruptcy, with options
limited for selling either the notes or the real estate. Those
close to the insurance and pension sector should consider the
possibility of coming distress and learn what strategies or tools
might be necessary to mitigate risks.
The private credit market, which has boomed as investment banks retreated from the business of lending money to risky companies, is yet to be fully tested in a crisis.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
