Outfront

Credit Convergence

The Blurring of Public and Private Credit

The merging of public and private credit markets is transforming capital allocation in unprecedented ways, creating new investment choices and expanding private credit’s reach to new investors. With added complexity, investors need to rethink the playbook for evaluating opportunities and risks in their credit portfolios. To do this, investors should leverage solutions that extend across origination, structured credit, and risk management. Together, these capabilities can provide investors with comprehensive credit strategies as the interplay between public and private markets deepens.

 

Watch PGIM experts on private capital, real estate, and fixed income discuss investment strategies and portfolio implications across the credit spectrum.

Opportunities and challenges in private credit investing

Favorite Opportunities in Real Estate Credit

Many senior lenders in commercial real estate are constrained, creating investment opportunities through mezzanine or preferred equity positions in the capital stack. PGIM Real Estate’s John Jacobs, Senior Portfolio Manager, Real Estate Private Credit, discusses how investors could capture equity-like returns along with downside protection.

Tackling the Challenge of Middle-Market Direct Lending

Matt Douglass, CEO of PGIM Private Capital, discusses the most challenging aspect of lending to the middle market: origination. While the pool of family-owned companies is large, deals can be hard to find. Middle-market direct lending requires an expansive network of investment professionals who have developed close relationships with companies over long periods of time.

Real Estate Credit Is an Expanding Universe

Investors can gain exposure to commercial real estate credit through a growing array of options, including CMBS bonds, CLOs, and syndicated loans. PGIM Real Estate’s John Jacobs, Senior Portfolio Manager, Real Estate Private Credit, explains why the direct origination model is one of the most appealing ways to invest in this space.

Incorporating Non-sponsored Deals in Investment Strategies

Private credit offers access to fixed income opportunities that investors may not be able to obtain otherwise, along with illiquidity premiums relative to public markets and structural protections in the form of covenants. Matt Douglass, CEO of PGIM Private Capital, discusses.

Working with Borrowers to Manage Signs of Stress or Defaults

Matt Douglass, CEO of PGIM Private Capital, talks about the importance of covenants and relationships with issuers in delivering value during times of economic stress.

The Convergence of Public and Private Credit

Leveraging insights from investment professionals across our businesses, PGIM examines the forces driving convergence between public and private credit.

Explore the report