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March 14, 2022

Institutional investors expect a big rise in the issuance of new structured credit

New research from Aeon Investments, the London based credit-focused investment company, amongst pension funds and other institutional investors in Europe and the US who collectively have around $437 billion in assets under management, reveals that 86% believe there will be more new structured credit issued in 2022 than there was in 2021.

However, the research reveals those issuing the structured credit need to ensure they have a strong focus on ESG, as 80% of pension funds and other institutional investors expect to place a greater focus on this over the next 12 months when selecting investment opportunities in this area.

This explains why 36% of those interviewed anticipate a dramatic increase in ESG factors accounting for rating actions concerning structured credit over the next 12 months, and a further 49% expect a slight increase.

When asked to pick the most important features when considering whether to subscribe to a new debt issuance from an organisation, 53% selected energy efficient in their top three, and this was followed by 46% who cited energy consumption and 44% who chose levels of recycling.

Finally, when it comes to investing in structured credit, 34% of professional investors said it is very important that the financial institution offering these co-invest in their investment vehicles with the same underlying risk and fee structure, and a further 63% said this is quite important.

“Even through the worst of the Covid crisis, the structured credit market grew, and our research shows that investors expect the number of issuances to increase further this year, but investors are becoming more demanding in terms of what they expect before they invest, particularly with regard to ESG factors.”

Oumar Diallo, Chief Executive Officer, Aeon Investments

Institutional investors expect a big rise in the issuance of new structured credit

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