NN IP: Uncertain macro outlook bolsters appeal of alternative credit
NN IP: Uncertain macro outlook bolsters appeal of alternative credit
The search for yield is prompting more and more investors to look beyond public markets and explore the world of illiquid asset classes. The low-interest-rate environment and uncertainty on interest rates bolster the appeal of alternative credit, which can offer returns above those available in traditional public markets.
Niels Bodenheim, Head of Alternative Credit at NN Investment Partners (NN IP) shares his insights on these matters in the latest Investment View.
“The current outlook is clouded by a mix of factors that are difficult to read: uneven re-opening of economies, supply chain bottlenecks, surging energy prices, worries over inflation or even stagflation. With market volatility rising, memories of last year’s Covid-inspired market gyrations direct investors toward the stability of private debt, which is largely decoupled from traditional markets. At the same time, tighter banking regulations mean traditional lenders have pulled back from some sectors, creating a financing gap that needs to be filled. As a result, more opportunities are becoming available in alternative credit, spanning the spectrum of different credit risks and durations – from infrastructure or project finance to commercial real estate or residential mortgages to corporate loans or trade finance”, says Bodenheim.