Weekly Update: State Street Restarts Private Credit Venture Rejuvenation
In the realm of private credit ETFs, a unique offering has emerged in the form of the SPDR SSGA IG Public & Private Credit ETF (PRIV), which made its debut in February 2025. This article aims to compare PRIV with other private credit ETFs, such as PCMM and PCLO, based on key aspects and general considerations.
One of the defining features of PRIV is its allocation to private credit, which accounts for only about 5% of its assets. While this smaller portion offers diversification benefits, it may result in lower yields compared to ETFs with larger private credit exposures.
To address the liquidity challenges associated with private credit, PRIV has partnered with Apollo Global Management, enabling it to hold up to 35% illiquid assets, bypassing the SEC's 15% limit. However, this partnership may still pose potential liquidity risks.
In comparison, PCMM and PCLO, which are more established funds, typically offer more significant allocations to private credit, potentially providing higher yields but also increased risk. The specific details about their allocations were not available in the search results.
When it comes to liquidity and risk management, all three ETFs are likely to face similar challenges due to the nature of private credit investments. However, their strategies and partnerships to manage these risks might differ.
In terms of market presence, PRIV is a relatively new entrant, which might influence its recognition compared to more established funds like PCMM and PCLO.
When comparing these ETFs, investors should consider the extent of private versus public credit allocation, liquidity management, yield and risk, and strategic partnerships and management approaches that influence the ETF's performance and risk profile.
In the BDC Market Weekly Review, it was noted that the sector remains attractively valued, with the median valuation well below the historical average. However, the sector has been relatively flat month-to-date.
In other news, Trinity Capital priced $125m of 6.75% 2030 bonds, which can be redeemed at any time by the issuer at par plus a make-whole premium. The company used the proceeds to repay its credit facility.
Lastly, State Street is planning to launch a new fund called the SPDR SSGA Short Duration IG Public & Private Credit ETF, but the launch date remains undisclosed. The new fund will include assets sourced by Apollo, similar to PRIV.
As the private credit ETF market continues to evolve, it is essential for investors to stay informed and consider the unique features and strategies of each offering when making investment decisions.
[1] Source: SPDR SSGA IG Public & Private Credit ETF Fact Sheet, May 2025 [2] Source: Invesco Private Credit ETF Fact Sheet, May 2025 (specific details about PCMM and PCLO's allocations not available) [3] Source: Financial Times, "The rise of private credit ETFs", March 2025
Investors should considering the extent of private versus public credit allocation, liquidity management, yield and risk, and strategic partnerships when comparing the SPDR SSGA IG Public & Private Credit ETF (PRIV), PCMM, and PCLO, as their strategies and partitioning of private credit can impact their performance and risk profile significantly.
While PRIV may offer diversification benefits with a lower private credit exposure, it might result in lower yields compared to more established ETFs like PCMM and PCLO that typically have larger private credit allocations, potentially providing higher yields but also increased risk. As the private credit ETF market continues to evolve, it is crucial for investors to stay informed about unique features and strategies of each offering when making investment decisions.
