Introduction to Investment Grade Private Credit

Not all private credit is the same—in this Market Overview & Analysis we explore the nuances of the investment grade private credit market.

Introduction

Large institutional investors allocate a significant amount of their total assets to fixed income, which is intended to provide consistent income and lower volatility than equity. Insurance companies, pension funds and certain other long-term investors seek assets that provide both long duration and potentially lower losses than other investment choices. Many of these investors now realize that the fixed income asset class which can provide the duration they need along with potentially higher returns and lower losses is “private credit,” also known as “private placements” (in this paper we use both terms interchangeably).

The purpose of this paper is to introduce the asset class and explain its nature, characteristics and distinctions and explore some of the advantages and risks of investing in private credit.

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Investment Risks

There are no guarantees a diversified portfolio will outperform a non-diversified portfolio. Past performance is no guarantee of future results.

All investments in bonds are subject to market risks. Bonds have fixed principal and return if held to maturity, but may fluctuate in the interim. Generally, when interest rates rise, bond prices fall. Bonds with longer maturities tend to be more sensitive to changes in interest rates.

All equity investing involves risks of fluctuating prices and the uncertainties of rates of return and yield inherent in investing. Foreign Investing does pose special risks including currency fluctuation, economic and political risks not found in investments that are solely domestic. Emerging Market stocks may be especially volatile. Stock of an issuer in the Fund’s portfolio may decline in price if the issuer fails to make anticipated Dividend Payments because, among other reasons, the issuer of the security experiences a decline in its financial condition. Securities of Small- and Mid-Sized Companies may entail greater price volatility and less liquidity than investing in stocks of larger companies.

Important Information

This paper has been prepared by Voya Investment Management for informational purposes. Nothing contained herein should be construed as (i) an offer to sell or solicitation of an offer to buy any security or (ii) a recommendation as to the advisability of investing in, purchasing or selling any security. Any opinions expressed herein reflect our judgment and are subject to change. Certain of the statements contained herein are statements of future expectations and other forward-looking statements that are based on management’s current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Actual results, performance or events may differ materially from those in such statements due to, without limitation, (1) general economic conditions, (2) performance of financial markets, (3) changes in laws and regulations, and (4) changes in the policies of governments and/or regulatory authorities. The opinions, views and information expressed in this commentary regarding holdings are subject to change without notice. The information provided regarding holdings is not a recommendation to buy or sell any security. Fund holdings are fluid and are subject to daily change based on market conditions and other factors.

The opinions, views and information expressed in this presentation regarding holdings are subject to change without notice. The information provided regarding holdings is not a recommendation to buy or sell any security. Portfolio holdings are fluid and are subject to daily change based on market conditions and other factors.

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