Beyond Convergence

A Framework for Navigating Risk, Liquidity, and Relative Value in a One-Credit Era

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Public and private credit are no longer separate investment domains; they form a continuum navigated by issuers and investors. PGIM's Beyond Convergence report introduces a framework for assessing relative value throughout the full opportunity set and supporting a consistent decision-making process across the credit continuum.

Asking More of Public and Private Credit

How much liquidity is needed—and when?

Not all public assets are liquid, and not all private assets are fully illiquid. When liquidity is treated as a label, it overlooks investors’ varying liquidity needs. In reality, liquidity is a spectrum, and each investor’s needs shift along it. What matters is whether cash can be raised when it’s needed—especially when trading conditions tighten and assumptions about exits are tested.

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Can relative value be assessed across the public‑private continuum?

Assets can carry similar credit risk but look different in pricing, liquidity, and reported outcomes. A three-layer approach—at the point of purchase, across markets, and in portfolio construction—helps uncover where compensation is genuinely attractive after accounting for differences in risk, liquidity, and complexity.

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How can public-market signals improve private-credit assumptions?

Some risks show up in prices immediately; others surface slowly through valuations and cash flows. To address data limitations and to provide investors with more realistic expectations of long-term return volatility, private asset classes can be mapped to comparable public assets for volatility and correlation assumptions. This approach produces more conservative and realistic portfolio estimates as opposed to solely relying on private asset return series.

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How does PGIM translate clients’ risk, liquidity, and relative value views into public-private credit allocations?

Moving from “we like this opportunity” to a resilient portfolio is where many frameworks break down. The challenge is converting relative value signals into position sizes and pacing decisions that stay consistent with an investor’s risk tolerance and liquidity constraints, while still allowing the mix to evolve as opportunities change across the credit continuum.

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This is a stylized summary of complex themes and processes, provided for illustrative purposes only. Underlying assumptions and our views are subject to change.

Accessing Public and Private Credit

Credit Income

PGIM's best ideas across public and private credit

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Credit Secondaries

Diversified exposure with return enhancement from discounts

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Asset-based finance

Income generation through collateral‑backed lending to the real economy

Direct Lending

Senior secured, floating‑rate middle‑market loans

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Public multi-sector strategies

Flexible fixed income strategies built to navigate changing markets

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Views on the credit continuum

Capturing Alpha Across the Credit Continuum

Featuring Greg Peters, Co-Chief Investment Officer and Co-Head of Multi-Sector Strategies

Credit has structurally changed—complacency is high, recoveries may be lower, and volatility is creating compelling opportunities across public and private credit.

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Relative Value Across the Credit Continuum

Featuring Guillermo Felices, PhD, Global Investment Strategist

The fading distinction between public and private credit means assessing relative value has grown more complex. Investors may benefit from a framework that looks across the credit continuum in search of the best opportunities.

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Data, Complexity, and the Credit Continuum

Featuring Tom McCartan, FIA, CFA, Multi-Sector Portfolio Manager

Combining public and private credit in a single portfolio requires more than access; it requires discipline, judgement, and scale.

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Join our upcoming webcast

The One Credit Era: A Disciplined Approach to Public and Private Credit

Register to join on us on May 14 for a webcast examining how a unified public-private approach may be beneficial amidst market volatility, headline-grabbing redemption news, and structural changes that could impact access to the space. Can’t join at that time? All registrants will receive immediate access to the on-demand replay after the initial airing.

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Talking public-private portfolios

In an armchair discussion, Greg Peters and Tom McCartan share views on why combining public and private credit is trickier than it looks—and why simple labels tend to fall apart in practice.

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Resilient credit portfolios are built by first identifying investor constraints—risk and illiquidity tolerances—and then acting on relative value within those boundaries. A conversation with PGIM can help explore what that looks like in practice.

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