TCDRS crosses $1bn mark for private credit strategies

Strategic credit received more than $500m after delivering a one-year return of 11.3%.

Texas County & District Retirement System has invested more than $1 billion this year in private credit, with the majority going to the strategic credit bucket, according to data from the Austin-based pension fund.

 

TCDRS has invested $525 million into strategic credit year-to-date. Most recently, on 19 July, the retirement plan pledged $50 million to Accel-KKR Growth Capital Partners III, a mezzanine debt fund focused on the technology industry.

 

 

Distressed debt delivered one-, three- and five-year returns of 19.4 percent, 10.3 percent and 10.3 percent, respectively, making it the best performing private credit strategy for the pension fund.

Strategic credit took second place, delivering one-, three- and five-year returns of 11.3 percent, 8.4 percent and 8.4 percent for TCDRS. Direct lending has returned 9.4 percent over the past year, while the strategy returned 6 percent and 4.9 percent over three- and five-year periods.

 

 

The market value of the private credit portfolio – which includes distressed debt, direct lending and strategic credit – stood at $3.8 billion, or 13 percent of TCDRS’s $30 billion portfolio, in the first quarter. The portfolio was composed of $2.2 billion in strategic credit, $1.1 billion in direct lending and $518 million in distressed debt.

 

 

The only categories to beat distressed debt returns were private equity and private real estate, which delivered one-year returns of 19.8 percent and 17.0 percent, respectively. In the first quarter, the pension fund had nearly the same amount invested in private equity as it did in private debt – about $3.8 billion each – and approximately $631 million in private real estate.