Alternative Credit

Check out our Alternative Credit intelligence now

As one of the first investors to open the market to Alternative Credit investing, we have a vast amount of knowledge and expertise you can benefit from. Our acclaimed guidebook on Alternative Credit is a good place to start when you are new to Alternative Credit, but don’t miss out on the interesting survey on investors' mood towards Alternative Credit by downloading the findings of our unique survey.

Highlights of Alternative Credit

Why we see opportunities
  • To achieve a decent yield on their portfolios, investors have started taking more credit risk. For many investors, it might be better to relinquish a certain amount of liquidity in return for higher yields.
  • Alternative Credit - or illiquid loans, or alternative fixed income - offers this combination of lower liquidity, yield pick-up and better downside protection.
  • With banks withdrawing from capital markets, this leaves room for institutional investors to step in.
  • Last but not least, the growing importance of Environment, Social and Governance (ESG) factors can be addressed in this market by incorporating them into tailor-made documentation and close monitoring throughout the investment period.

How does NN IP capture these opportunities?
  • NN IP selects its investments carefully, choosing from a broad base of opportunities via its large network.
  • Our solid Alternative Credit platform, ranging from Legal and Risk departments, portfolio managers to administrative expertise, allows us to leverage on our capabilities and invest on behalf of other institutional clients.
  • NN IP’s heritage as asset manager to a large insurance company leads us to focus on market segments offering risk profiles that match affiliated insurers’ preferences and objectives.

How does this benefit our clients?
  • Exchanging government bonds or investment grade credits for Alternative Credit with a similar risk profile provides a yield pick-up of 50-125bps.
  • Alternative Credit with long duration and predictable cash flows is highly suitable for liability matching.
  • Some Alternative Credit strategies contain a floating rate coupon floor to protect from negative rates.
  • Default rates are relatively low and recovery rates comparatively high, leading to lower write-downs.
  • Low market value volatility due to mark-to-model valuation makes the portfolio less vulnerable to market sentiment and offers a steady cash yield.
  • Alternative Credit market size offers a scalable alternative to government bonds and investment grade credits.

Why choose NN Investment Partners?
  • NN IP’s dedicated, experienced Alternative Credit teams are trusted partners to top-tier market participants, having invested significant volumes and cultivated a global network over many years.
  • First-ranking access to transactions and tangible negotiation power over deal parameters allow our teams to select deals carefully.
  • Our experience of investing for large institutional clients enables us to give expert advice and context to investors about the positive impact of Alternative Credit on portfolio optimisation, liability matching and regulatory capital requirements.
  • Strong in-house expertise in areas vital to Alternative Credit, such as Legal Counsel and Risk Management.
  • Dedicated operational infrastructure with 20+-year track record in private loan servicing.

Our Alternative Credit strategies