AMP Limited has begun scaling back its exposure to private credit, describing conditions in the market as increasingly “frothy” as it repositions capital toward infrastructure and other asset classes, according to a report by Bloomberg.
The Australian wealth and pension manager, which oversees around AUD159bn in assets, has gradually reduced private credit allocations within its diversified credit portfolio from roughly 2.5% to about 2% over recent months, according to its investment leadership.
Stuart Eliot, AMP’s general manager of investments, said the decision reflected a less attractive risk-return profile in the sector, pointing to tightening yield spreads and weaker lending terms as key factors. He noted that declining compensation for risk and looser covenants made continued allocation less compelling.
Rather than actively withdrawing from the asset class, AMP is allowing existing private credit positions to run off through refinancing while redirecting proceeds into cash and other investments, particularly global infrastructure assets.
The move comes amid broader debate around the $1.8tn private credit market, which has faced rising scrutiny following a wave of redemption pressures from mainly retail-focused funds earlier this year. Several major asset managers, including Apollo Global Management, BlackRock and Ares Management, have seen increased investor withdrawals in certain strategies, prompting tighter liquidity management in parts of the industry.
Regulators, including Australia’s securities watchdog, have also increased oversight of private credit funds as the sector expands rapidly across institutional portfolios such as Australia’s AUD4.5tn pension system.
