A complimentary source for additional yield: Investment Grade Private Credit

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  • Although institutional investors’ allocation to publicly traded investment grade (IG) bonds is essential for liquidity and stability, yields today are historically low. The typical corporate pension fund, for example, with a fixed income allocation of close to 50% and long-term performance goals averaging 6.5%, faces a wide return gap to be filled.
  • A portfolio of mid-sized allocations to IG private credit could generate a substantial yield premium of 0.4% to 1.0% over core fixed income, with similar or even improved credit risk. Such a “sweet spot” portfolio delivers broad diversification while also enabling participation in the most attractive large deals.
  • IG private credit drawdown protections are stronger than those of public bonds’. Private credit is not subject to the forced selling — and resulting sharp price decline — that can result when public bond ratings fall below a rating of BBB. In addition, IG private credit terms generally provide strong covenant protections, which could provide downside protection to investors from financial and event risk.
  • Skillful, experienced investors with a well-developed deal network can build customized IG private credit portfolios that could improve portfolio outcomes for institutions with surplus liquidity, both on an absolute and risk-adjusted basis. Asset managers with a financial institution parent have a real advantage in this “sweet spot” market segment.
Securian Asset Management
Securian Asset Management

Our asset management business has been built with a risk and liability management focus, coming from our history investing for the General Account of our parent, Securian Financial Group. Since 1880 we’ve been committed to providing investment solutions enabling our clients to achieve their goals with confidence.
We are staying true to our purpose, and our values, while being innovative and nimble to prepare our clients to meet their future from a position of strength. As a financially stable, non-public company we focus on the long-term and execute consistently for our clients.

John Messing
Vice President, Institutional Sales
(651) 665-5097

400 Robert St. N.
St Paul, MN 55101

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