Corporate Private Credit Market¹

Origination Surges on Larger Deals

• Through September 30, market origination surged to $94.7 billion in 2024 vs $62 billion in first half of 2023. 
• As issuers raise larger deals, average transaction size rose to $359 million across 264 transactions YTD.
• North America led in volume with 72% of total issuance, followed by Europe at 22%, Australia at 4% and LatAm at 2%.
• Majority of issuance was in USD at 76%, followed by 10% in Euro, 7% in CAD, 5% in GBP and 2% in other currencies.
• The trend of delayed fundings was low at 6%.
• Spreads Unchanged, Treasuries Tighten
• Public spreads were relatively unchanged from Q2, tightening 5 bps with an ending OAS at +89bps.
• The 10-year UST had another active quarter, as yields tightened 70 bps to end Q3 at 3.79%.
• We expect the Federal Reserve to reduce the Fed funds rate to a 4.50-4.75% range by year-end.

MIM Corporate Private Credit Activity

• MIM’s origination through September 30, totaled $4.7 billion. 
• Deal momentum tripled vs Q3 2023.
• We are seeing an uptick in market activity as interest rates has come off recent highs.
• We expect this market momentum to continue into Q4, but remain cautious about potential volatility around the U.S. election.

MIM’s Year-End Outlook 

• The private market continues to post record issuance and is on pace for a solid year. We expect it to be resilient amid economic uncertainty around the U.S. election. 
• Election-related volatility could offer an opportunity to take advantage of favorable pricing dynamics.
• MIM is well-positioned to leverage our underwriting experience, issuer relationships and stable private platform to capitalize on market opportunities.

Infrastructure Debt Market

Significant Global Activity, Strong Year-End Outlook

• Q3 2024 saw significant global activity in infrastructure debt, with a strong outlook for Q4. 
• Megatrends such as decarbonization and digitalization continue to fuel demand for infrastructure finance.
• We expect the need for infrastructure capital to continue to grow, driven by global demand for new infrastructure and projects supporting new technologies.
• Agented deal flow continues to be complemented by strong issuance of bilateral, directly-sourced transactions.
• Expectations for the year remain positive, with a number of transactions in active dialogue and a strong pipeline of opportunities across core infrastructure sectors.

Origination Rises 83%, Well Diversified 

• Origination volume totaled $4.4 billion as of end of September, a steep increase over $2.4 billion in the same period last year. 
• Transactions MIM originated were well diversified across all project types, led by renewables, transmission, LNG and digital.
• With strong demand from investors globally and a competitive market, MIM’s focus is on infrastructure partner relationships and targeting bilateral and direct deals.
• MIM’s global footprint and ability to source unique bilateral transactions enable us to secure attractive investment opportunities for our clients.
• Origination outside the U.S. reached 46% of infrastructure investment volume in 2024.

MIM’s Year-End Outlook

• We continue to see diversified global opportunities, from decarbonizing energy and transport to advancing communications to enhancing critical social infrastructure. 
• Proprietary deal flow remains very strong, as sponsors continue to value certainty of execution and reliable partners for M&A, refinancing and Capex needs.
• As the need for infrastructure private capital continues to grow, MIM is well positioned as an experienced global lender to provide tailored solutions that support financing needs via long-term partners.
• While global competition for infrastructure assets has increased, we remain disciplined in analyzing and negotiating deal structure, focused on relative value across all investments.
• High selectivity, disciplined underwriting and solid structures are cornerstones to ensure resilience as MIM builds a client portfolio of private infrastructure debt transactions.

Private Structured Credit Market¹

Sideways Movement, Robust Demand in Q3

• Esoteric ABS spreads moved within a narrow range of low-mid 200 bps in Q3. 
• Investor demand was robust and should remain so into 4Q, limiting spread widening unless a market risk-off event dampens investor sentiment.
• Spreads have remained near the tight end of the 52- week range.

MIM’s Outlook

• New macro data reflects a rise in delinquencies in autos, credit cards and installment loans, particularly in lower FICO segments, while prime borrowers remain stable. 
• ABS performance can diverge from broader macro data due to ABS issuers imposing tighter credit standards vs overall market.
• Consumer credit performance metrics remain rangebound; delinquencies and charge-offs are trending near long-term averages.
• Deal structural features offer significant protection against a macroeconomic downturn.
• Corporate revenue and earnings have displayed resilience into the fed rate hike cycle, supporting private equity portfolio company valuations and keeping fund finance LTVs stable.
• Anticipated fed rate cuts are likely to provide relief to both consumer and commercial ABS borrowers, which should support fundamental performance.

MIM Committed Transaction Activity

• MIM activity for Q3 was strong with $818 million in committed investments in the commercial, residential and alternatives financing sectors. 

Endnotes

1. MetLife Investment Management, Private Placement Monitor Credit quality assessments were performed internally by MIM and have not been verified by independent sources. Any internal ratings (i.e., MetLife ratings) presented in this document were developed internally by MIM. Such ratings are not recognized ratings used by other investment managers or funds, including those investing in the sectors in which MIM invests. Other ratings, including those published by an independent credit ratings agency, may be more relevant in evaluating creditworthiness or may present the credit quality of issuers or assets in a more or less favorable manner than such internal ratings do. MIM’s internal ratings are subjective; MIM has an incentive to assign internal ratings in a manner that more closely meet investor and/or yield expectations, or otherwise provides an advantage to MIM. Accordingly, such internal ratings should be viewed as one factor among other factors for evaluating creditworthiness, and you should make your own determination as to the weight you place on such internal ratings. Please contact MIM for additional information on how such ratings are derived.

Disclosure

This material is intended solely for Institutional Investors, Qualified Investors and Professional Investors. This analysis is not intended for distribution with Retail Investors. This document has been prepared by MetLife Investment Management (“MIM”)¹ solely for informational purposes and does not constitute a recommendation regarding any investments or the provision of any investment advice, or constitute or form part of any advertisement of, offer for sale or subscription of, solicitation or invitation of any offer or recommendation to purchase or subscribe for any securities or investment advisory services. The views expressed herein are solely those of MIM and do not necessarily reflect, nor are they necessarily consistent with, the views held by, or the forecasts utilized by, the entities within the MetLife enterprise that provide insurance products, annuities and employee benefit programs. The information and opinions presented or contained in this document are provided as of the date it was written. It should be understood that subsequent developments may materially affect the information contained in this document, which none of MIM, its affiliates, advisors or representatives are under an obligation to update, revise or affirm. It is not MIM’s intention to provide, and you may not rely on this document as providing, a recommendation with respect to any particular investment strategy or investment. Affiliates of MIM may perform services for, solicit business from, hold long or short positions in, or otherwise be interested in the investments (including derivatives) of any company mentioned herein. This document may contain forward-looking statements, as well as predictions, projections and forecasts of the economy or economic trends of the markets, which are not necessarily indicative of the future. Any or all forward-looking statements, as well as those included in any other material discussed at the presentation, may turn out to be wrong.

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^1. MetLife Investment Management (“MIM”) is MetLife, Inc.’s institutional management business and the marketing name for subsidiaries of MetLife that provide investment management services to MetLife’s general account, separate accounts and/or unaffiliated/ third party investors, including: Metropolitan Life Insurance Company, MetLife Investment Management, LLC, MetLife Investment Management Limited, MetLife Investments Limited, MetLife Investments Asia Limited, MetLife Latin America Asesorias e Inversiones Limitada, MetLife Investment Management Japan, and MIM I LLC, MetLife Investment Management Europe Limited and Affirmative Investment Management Partners Limited.