Private Credit Taps Insurance Money Through Rated Bonds, Bloomberg Reports
- Editor
- Feb 7
- 2 min read
What's Happening
Bloomberg reports private credit firms are creating new "rated feeder" structures that transform fund stakes into rated bonds, allowing them to access trillions in insurance company assets. Apollo just demonstrated the model's potential with a $5 billion raise.
Why It Matters
Scale: Opens up massive new funding pools as private credit firms seek growth beyond traditional sources
Evolution: Marks a sophisticated shift in how private debt is packaged and sold to conservative investors
Innovation: Creates a blueprint for other firms to tap insurance capital more efficiently
The Key Moves
Structure: Private credit firms pledge fund stakes to vehicles that issue rated bonds
Benefits: Insurers' capital charges drop from 30%+ to around 2% for rated securities
Terms: Apollo's recent 30-year structure sets precedent for long-duration offerings
By The Numbers
Capital Relief: 2% capital charge for rated bonds vs. 30%+ for direct fund holdings
Deal Size: Apollo raises $5 billion through new rated feeder structure
Market Entry: Smaller player Falcon Investments seeking $300 million using similar model
Insurers gain:
Capital Efficiency: Dramatically reduced capital requirements through rated bond structure
Risk Profile: Investment-grade rated exposure to private credit yields
Duration Match: Long-term assets that align with policy liabilities
Private Credit Firms secure:
Capital Access: Entry point to trillion-dollar insurance investment pools
Growth Funding: Stable, long-term capital for market expansion
Product Flexibility: Ability to package various credit types in single vehicles
Key Players
Apollo Global: Pioneer in large-scale rated feeder structures
Blackstone: Building insurance partnerships with Resolution Life, AIG, Allstate
Falcon Investments: Smaller firm showing rated feeders' broader market appeal
Key Quote
"Ultimately the growth of this market is good. Aggregating and pooling allows us to invest in the private credits we've done deep diligence on with less risk." - Rudy Sahay, Aquarian Holdings
The Wrap
The rated feeder trend signals private credit's evolution from niche to mainstream asset class, as firms engineer clever ways to tap conservative institutional capital. The model's success could reshape how private credit accesses funding for years to come.
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