Private credit deals are top of the most wanted list for Australia’s biggest pension funds as they look for investments offering a key hedge against inflationary pressures and higher interest rates, according to a report by Bloomberg.
The report cites recent data from Preqin as revealing that the global private credit market has now reached $1.6tn, with investors attracted by the the typical floating-rate structure of private credit deals.
Australia’s AUD3.5tn pension fund sector is the fourth largest in the world and managers have been turning to unlisted assets including private credit as they look to deploy recent record inflows.
Australian Retirement Trust, the country’s second-largest pension with more than AUD260bn billion of assets, Hostplus (AUD100bn) and UniSuper (AUD124bn) are among the big funds looking to up their allocations to the asset class.
The report quotes Hostplus CIO Sam Sicilia as saying: “You are still getting 8, 9, 10, 11% returns out of private credit with the volatility that’s nowhere near the equity market.”
