Credit Secondaries

Private Credit

Credit Secondaries

Pursue liquidity and portfolio flexibility through credit secondaries—strategic transactions enabling the buying and selling of existing credit assets on the secondary market.

Financing Options

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Overview

Investment Strategy

Credit Secondaries provides access to private credit secondary investments in the North American and European middle market, and customized liquidity solutions for fund managers. Key tenets of our strategy include:

Focus on middle market credit portfolios (underlying issuers with $10 - $100mm of EBITDA)
Predominantly focused on the senior secured direct lending market, though flexibility to consider more opportunistic credit asset classes
Industry generalist approach
Geographic focus on North America and Western Europe
Balanced mix of LP-led and GP-led transactions

GP- and LP-led Transactions

Navigate market cycles and enhance return potential with a balanced approach across GP-led and LP-led transactions
LP-led transactions for broader diversification¹, GP-led transactions may have strong alpha generation ability

Investment Focus

Focus on what we believe to be high-quality assets with predictable cash flows and low loss ratios
Potential for return enhancement through targeted allocation further down the credit spectrum

US & EUROPE

Ability to underwrite transactions in the U.S. and Europe, leveraging regional teams’ market knowledge
Slight overweight U.S., given larger market size

Market Segment

Focus on the middle market, characterized by higher spreads, lower leverage ratios, and tighter covenants
PGIM with decades of experience investing in the middle market

Differentiated Approach

Proactive Sourcing

Building and maintain strong relationships with potential secondary sellers, including LPs and GPs, with the goal of learning about secondary opportunities before such opportunities officially come to market

Middle Market Focus

We consider the middle market the most attractive opportunity set in the credit secondaries market, given its deep pool of secondary assets addressed by a limited set of buyers. Underlying middle market portfolios can also often benefit from higher spreads and better covenant protections than exist in larger parts of the private credit sector

Thoughtful Portfolio Construction

Emphasize risk management through a disciplined approach to portfolio construction predominantly focused on investing in private credit funds that themselves primarily invest in direct lending opportunities, i.e. first-lien, senior secured debt securities which are typically characterized by predictable cash flows, lower risk of default, and high recovery rates

Customization

Sustaining a constant dialogue with potential sellers, which allows us to develop tailor-made solutions with high desgrees of seller-specific customization

Team