S&P Global Market Intelligence recently collaborated with
Coalition Greenwich to better understand trends in credit
investing, particularly in the growing alternative credit market.
The research team at Coalition Greenwich spoke with decision-makers
at more than 40 investment managers and institutional investors to
explore how their credit investment mix is changing, and what their
key pain points are around technology and portfolio management.
The results highlighted a continued strong interest in leveraged
loans and private debt. The upshot of this trend is increased
complexity in investment workflows as more investors grapple with
inefficiencies typical of these investments.
Investors lack quality information about some
The research reveals that, as fund managers and institutional
investors look for returns, more are seeking out senior lending
investments across the spectrum of leveraged loans and private
debt. Nearly half (46%) of respondents expect to add more private
debt to their portfolios. While portfolio managers see many
benefits in diversification, it also brings about more operational
complexity in monitoring and managing investments.
Lack of good financial data about borrowers is one of the
biggest perceived challenges. More than half of the respondents
(62%) report that they lack valuable information about their credit
investments. Most cobble together data from a variety of sources.
The case is especially acute for North American participants,
nearly three-quarters (76%) of which report that they lack quality
data. Limited access to information creates an incomplete picture
that hinders decision-making.
The lack of transparency in loans and private debt is no
surprise: this section of the credit market woefully lags behind
exchanged-traded markets. Despite the industry’s best efforts to
streamline and digitize, some credit instruments are still
“paper-based.” As portfolios become more complex, portfolio
managers and traders are seeking more robust solutions that reduce
their reliance on manual processes and enable them to manage their
data more efficiently.
Complexity highlights the importance of
The complexity of these assets elevates the risks and costs of
administering and managing them. Yet, even among the biggest
platforms, no single provider excels in every function. The same is
true with functionality, with the best solutions for post-trade
processing, risk management and trade execution rarely on a single
Credit expertise matters more than ever in these complicated
markets, as evidenced by the respondents’ ranking of a “best of
breed approach” among the top three most important features of
their investment platform. As the research indicates, one-stop-shop
vendor hasn’t proved to be a reality. The results further
underscore the value of specialists who understand these
instruments and are able to customize and integrate relevant data
with their existing technology ecosystem.
the markets’ tech and behavioral problems
As little as five years ago, many firms thought of cloud-based
portfolio management technology as a “non-starter” because of
concerns about security, the need to have ‘full control’, and in
some jurisdictions, signatures on paper documents were still being
used in settling secondary loan transactions. As more investment
flows into different areas of the credit market, we will likely see
more positive pressure to build efficient, repeatable processes and
toward reducing highly bespoke systems or customizations.
Among the issues that respondents find most frustrating in
managing credit are the lack of tech integration and automation
with the investment analysis and operations, cited by 29% of
respondents, and the difficulty of gathering and normalizing data
(26%). There is high demand for further automation; in the words of
one interviewee, there is a keen need to “spend less time doing
reports and data collection and more time talking to clients.”
While the respondents were concentrated in portfolio management and
trading roles, these themes ring true throughout all stages of the
credit investment workflow.
These industry problems require careful thought and tangible,
measurable progress to untangle. We have built our business around
solving our clients’ complex problems through collaborative
engagement with industry participants, providers and regulators. We
are thrilled to lead in this journey that will undoubtedly continue
to inspire the evolution, transparency and efficiency that drives
operational alpha and asset class liquidity.
Read the full research
Learn more about the research and download the full results
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investing with integrated, front-to-back technology solutions and
managed services affording access to portfolio insights, workflow
automation, and deal administration for diversified credit
portfolios, CLOs, syndicated and leveraged loans. Our solutions
support credit research and analysis, connectivity, trade
settlement, asset management and portfolio administration. Learn
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Posted 14 June 2022 by Elina Gokh, Managing Director & Global Head of Credit Solutions, IHS Markit
IHS Markit provides industry-leading data, software and technology platforms and managed services to tackle some of the most difficult challenges in financial markets. We help our customers better understand complicated markets, reduce risk, operate more efficiently and comply with financial regulation.
This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.