AllianceBernstein says insurers should tailor private credit allocations to their liabilities and liquidity needs, with yields compensating for capital costs. It notes narrow spreads, borrower stress and potential opportunities as retail fund withdrawals could reduce lending competition.
AllianceBernstein says insurers should tailor private credit allocations to their liabilities and liquidity needs, and require yields to compensate for capital costs. Narrow spreads on investment-grade private placements are pushing some insurers toward private mortgages, commercial real estate loans and asset-based finance.
Withdrawals from retail-oriented private credit funds could reduce lending competition and potentially create higher-spread opportunities for insurers with long-term investment horizons. Rising non-accruals signal pockets of borrower stress, AllianceBernstein says, underscoring the need to assess repayment capacity rather than rely solely on ratings.
Corporate direct lending remains largely below investment grade, making it a return-seeking allocation rather than a replacement for core investment-grade holdings.
