JPMORGAN IDENTIFIES INSURANCE AND PENSION FIRMS AS LEADING DIVESTMENTS FOR 2024
JP Morgan, a leading financial services provider, has indicated that insurance and pension companies are at the forefront of major organizations expected to be divested in 2024.
JPMorgan Asset Management forecasts that investors might divest as much as $30 billion from their holdings in private credit funds this year.
Andrew Carter, JPMorgan’s Head of Private Credit Secondaries, highlighted that these companies, prominent participants in the $1.6 trillion private credit market, are seeking to sell portions of their investments in less liquid funds to generate cash. This trend is contributing to the growth of the global secondary credit market.
Carter explained, “Today, deal flow is again being driven by liquidity needs given the slowdown in cash flows created by debt repayments, which has resulted from decreased M&A and capital markets activity.”
In the context of Nigeria, the private credit market involves the buying and selling of debt instruments outside the regular banking system, emphasizing the role of FMDQ Securities Exchange.
FMDQ serves as a platform for the trading and listing of various debt instruments, including commercial papers, corporate bonds, and sub-national bonds.
Insurance and pension funds are common investors in this private debt market, using these instruments to earn returns on their investments. As of November 2023, the total pension fund assets invested in corporate debts, money market instruments, and commercial papers in Nigeria amounted to about N3.76 trillion ($3.99 billion).
As of January 10, 2023, the debt market size on the FMDQ Securities Exchange was reported at N47.95 trillion ($50.9 billion).
Bloomberg reported that pension and insurance companies are reconsidering their investments in global credit markets to manage liabilities or respond to new regulations. However, sovereign wealth funds in the Middle East are increasing their involvement in these markets, according to data from the Global SWF 2023 Annual Report.
Andrew Carter noted, “The general trend we’re seeing in private credit is that Europe is selling and the Middle East is buying.
(Image source: Google Search Engine)
(From Tobi Adetunji; The News Source: Techeconomy)
