This relatively new alternative asset class had a 2.7% rate for loan non-payments in the second quarter, a Proskauer study says.
The loans yield around 10% yearly, a big enticement to investors, and borrower demand is high, according to Turning Rock Partners.
Private equity investment in the insurance industry is affecting how some view risks in the pension risk transfer market, while others say it will broaden the PRT sector’s appeal as a diversification tool.
JPM chief points out that these loans have not yet faced a real economic downturn, which high-yield did.
Among a sampling of them, 21% had first quarter demotions, striking a possibly worrisome note for a key part of the economy.
It will take time for the system to work through what is effectively a liquidity queue.
Pension funds, sovereign wealth funds, insurance firms and family offices ‘could be caught unaware by a dramatic rerating of credit risks across the asset class.’
Maybe not much. The business development company stock index has kept climbing, regardless.
Factor in risk adjustments and fees, and this fast-growing asset class’s high returns get whittled down, an academic paper finds.