Investors to increase private debt allocations in 2016

A survey of 88 investors globally by PDI reveals that most investors intend to increase their allocation to private debt. Of those that do not already have a set allocation, the majority plan to set one and increase their exposure to non-bank lending opportunities.

Private Debt Investor’s first limited partner survey has uncovered strong appetite for European lenders and confirmed that internal competition remains investors’ biggest concern.

Over the summer, PDI’s research team surveyed 88 investors with a view to discovering their allocation intentions and general views on private debt as an asset class. The results were positive for debt managers – 61 percent said they intend to increase their target allocation over the next 12 months.

The results also showed that 41 percent are under-allocated to private debt. And of the 26 percent that did not have a set allocation for the strategy, 17 percent plan to set and increase their allocation.

The survey forms the basis of our Perspectives supplement, published today alongside our latest magazine. You can download Perspectives by following this link.

And while the survey revealed good news on the allocation front, it also carried warnings. High levels of competition within the private debt market are, along with credit risk, what concerns investors the most.

US investors are most concerned about competition, while for the Europeans the two weighted evenly as the top issue. In Asia-Pacific, however, credit risk was rated the biggest issue by some margin with a Chinese slowdown as the next largest concern.

Of the respondents, 42 percent were headquartered in North America, followed by Europe (39 percent) and Asia-Pacific (11 percent). To make the results as representative as possible, we approached a wide range of LPs: public and private pension funds, funds of funds, the asset management arms of global banks, family offices, endowments, sovereign wealth funds and insurers.

For the full survey results and analysis, follow this link