Private Market News - 10/27/23

The big news this week? Studies show big things are coming for the alternative markets, big asset managers are entering the private credit arenas, the digital assets class joins the world stage, and the SEC is making changes. Read on for more.

Key Insights

• Benchmark rates remained near 16-year highs this week, with the 10-year Treasury yield hovering just below the 5% mark. GDP and real estate sector data this week reinforced the narrative that the US economy is headed for a “soft landing”.?
• Speculation that a spot #bitcoin ETF approval in the US was imminent led BTC to have its best week in a year and half, with the largest cryptocurrency surging to around $35,000 mark. News reports and recent developments, including that the SEC would not apply a court ruling overturning its rejection of Grayscale’s ETF application, helped spur the rally.?
• 彭博资讯 reported that private credit lenders are often dropping maintenance covenants—measures of financial health that borrowers have to uphold—to compete with bank leveraged loans. This is especially true for large loans, with only 7% of private credit loans over $500 million having maintenance covenants, compared with two-thirds of loans below $250 million. This highlights the importance of understanding the potential risks of private credit loans, especially larger ones.

Articles

Big Asset Managers Love Private Credit

A recent Citywire study found that 12 of the largest asset managers are launching funds in private credit and are highlighting it as a growth area.?

These companies include Fidelity Investments, Franklin Templeton, PIGM, and Nuveen, among others.

Read more: Citywire by Selin Bucak

Further reading: What is Private Credit, Really?

Global Alternatives Market Set to Reach Explosive $24.5T

According to a forecast from Preqin , the global alternative assets market will grow at an annualized growth rate of 8% between 2022-2028, and the global private debt AUM is forecast to double its 2022 total of $1.5T to a new record high of $2.8T, a compound annual growth rate of 11%.

Read more: Investment News by Steve Randall

Further reading: The Ultimate Guide to Tokenized Alternative Investments

JP Morgan Is Entering the Global Tokenization Arena

摩根大通 Onyx division is developing digital asset networks given the growing potential of asset tokenization, as it makes financial transactions more convenient and transparent, boosts liquidity, helps secure ownership rights, and enables asset fractionalization.

Read more: Securities.io by Gaurav Roy

Digital Asset Class Gets Big Win with World Bank’s 1st Blockchain Bond

Euroclear announced the successful settlement of its inaugural digital note, a World Bank offering on the Luxembourg Stock Exchange, which amassed 100 million euros ($106 million) dedicated to sustainable development initiatives.

Read more: Nasdaq by Murtuza Merchant

New SEC Rules Impact Alternative Assets in 5 Key Areas

New rules approved by the SC in August, 2023, are bringing big changes to private fund regulations. The rules become effective in November, 2023, followed by a transition period for compliance. Areas affected include: Quarterly Statement Rule, Audit Rule, Requirements for Adviser-Led Secondaries, Restricted Activities Rule, and Preferential Treatment Rule.

Read more: Dynamo Software by Mark Karchov