Investor Pulse: Observations from the Fund Finance Association Symposium

Our team had an opportunity to talk to more than 60 market participants at the Fund Finance Association’s 15^th Annual Global Fund Finance Symposium. S&P Global Ratings was the platinum sponsor for the event, which took place in Miami from Feb. 2-4 and attracted 3,000 attendees from funds, banks, and law firms. Our analyst Thierry Grunspan also spoke on a panel about continuation vehicles (CVs) and the evolution of liquidity.

What We Heard

CFOs are a hot topic. Investors are increasingly focused on collateralized fund obligations (CFOs) and rated-feeder/CFO-adjacent structures. Investors considered a strong fit for insurers' portfolios and a major driver of innovation in the structured market.

Insurance capital is evolving. Such capital is likely to become an anchor position in senior tranches. Insurers have structural advantages and fewer constraints than banks.

There's more need for rating solutions. That's because regulatory scrutiny is growing for private credit (esp. by the NAIC), potentially leading to standardized documentation. In addition, the risk of adverse regulatory treatment could push insurers towards more vanilla structures.

Evergreen/open-ended fund opportunities are accelerating. A top priority: Liquidity.

The product tool kit is expanding. Net asset value (NAVs) funds, hybrids, and separately managed account (SMA) packaging are expanding. The market is still working out guardrails for underwriting, valuations, and liquidity.

The market structure is shifting. It's moving from bank-dominated to a mixed bank + nonbank finance ecosystem, affecting syndication, agent roles, and pricing dynamics.

Continuation Vehicles and the Evolution of Fund Liquidity Panel Recap

• 2021 vintages coming due: CVs can be a bridge to a more permanent capital solution.

• Is there a CV for evergreen vehicles?

• Hybrid credit facilities: Combining sub lines and NAV facilities can provide additional lender support.

• Concentration: How to assess concentration among CVs.

• Clear sub-factors and transparency: The sub-factors for industry risk are well-defined, better enabling investors to understand the rationale behind a country BICRA rating.