The private credit sector is facing a significant stress test as high interest rates persist and borrowers continue to pay near-peak coupons. S&P has warned that UK pension insurers are increasing their exposure to illiquid private credit assets, which now exceed 10% of portfolios at firms like L&G and Standard Life. While US regulators have spent years attempting to clamp down on specific structured debts, insurers have reportedly shifted into alternative risky debt instruments to bypass regulatory oversight.
Insurers shift into alternative risky debt flavors to evade regulatory oversight that took four years to implement on specific structured instruments.
Read the full storyS&P Global warns that private assets now exceed 10% of portfolios at major insurers including L&G and Standard Life.
Private credit borrowers struggle with peak coupon payments as expectations for interest rate cuts continue to fade.