The View From Apollo How Can Private IG Enhance Fixed Income Allocations?
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Feb 14, 2025 Discover the intriguing world of Investment Grade Private Credit as the hosts differentiate it from public credit and unveil its expansive $40 trillion market. Explore the benefits and unique structures of asset-backed finance, alongside the shifting dynamics between banks and private credit underwriters. Uncover the advantages of private bonds that offer higher returns and engage in a fascinating discussion on the parallels between private investment and culinary creativity. The conversation also touches on the rapid advancements in AI and their impact on investing.
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Private vs. Public IG
- Public IG credit is efficient but offers limited spreads, concentrated portfolios (banking, consumer non-cyclical, tech), and less downside protection.
- Private IG credit allows direct origination, enhanced due diligence, covenant control, and often secured structures, yielding higher returns (1-200 bps) and recovery rates.
Borrower's Perspective on Private IG
- Investment-grade companies choose private borrowing for flexibility and surety of execution, especially for non-standard deals.
- Private credit offers confidentiality and faster execution, complementing public debt for specific needs.
Private IG Origination
- Private IG deals originate directly through bilateral agreements, via specialized platforms (e.g., Apollo's 16 platforms, including Atlas SP), or bank partnerships.
- Apollo leverages platform ecosystems like Atlas SP (ex-Credit Suisse securitized products) and bank partnerships for origination.
