Corporate Private Credit Market¹

Higher Origination, Larger Deals

• YTD market origination was up to $50 billion in 2024 vs $43 billion in first half last year.
• 30% of issuance volume came from new entrants to the private placement market, including three deals larger than $1 billion.
• Average deal size rose to $300 million across 169 transactions.
• North America led in volume with 68% of total issuance, followed by Europe at 26%, Australia at 5% and LatAm at 1%.
• Majority of issuance was in USD at 80%, followed by 10% in Euro, 6% in GBP, 4% in other currencies.
• Trend of delayed fundings remained low at 9%.

Spreads Unchanged, Treasuries Widen More

• Public spreads were relatively unchanged from Q1, slightly widening 4 bps with an ending OAS at +94bps.
• The 10-year UST had another active quarter. Yields widened 18 bps to end Q2 at 4.37%.
• Near term, we expect the 10-year UST to be range-bound from 4.0 to 4.5%.

MIM Corporate Private Credit Activity

• Deal momentum increased over 50% versus first half last year, with MIM origination for 2024 totaling $3.2 billion.
• While M&A activity remained subdued, issuers seemingly came to terms with higher-for-longer interest rates as more decided to access the market.
• We expect this market momentum to continue into Q3, but are more cautious as the US election nears.

MIM’s Second Half Outlook

• A challenging geopolitical backdrop makes us cautious for the potential of increased economic volatility, but we are comfortable that private credit is well positioned, given the structure of our transactions.
• The private credit market continues to grow, fueled by new issuers seeking flexibility of tenors and currencies combined with certainty of execution.
• This customizable dynamic will continue to result in strong relative value plus risk mitigation from financial covenants.
• MIM will continue to leverage our underwriting experience and stable private platform to help capitalize on anticipated strong near-term issuance

Infrastructure Debt Market*

Significant Global Activity, Strong Expectations

• Q2 2024 saw significant global activity in infrastructure debt, with a strong outlook for the second half of the year.
• Megatrends such as decarbonization and digitalization continue to fuel demand for infrastructure finance.
• Q2 witnessed the largest-ever private placement transaction done as a project finance structure, totaling $10 billion for a chip plant.
• We continue to see accelerated activity and focus in key infrastructure sectors including digital, transmission, transportation and water.
• 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 Up 50%, Well Diversified

• Origination volume totaled $3.2 billion YTD, 50% higher than last year.
• Transactions MIM originated were well diversified across all project types, led by renewable transactions, transmission, power and digital.
• MIM’s international footprint and ability to source unique bilateral transactions, enables us to secure attractive investment opportunities globally - originations outside the US reached 45% in 2Q24.
• With strong demand from investors, agented deals are broadly shown and highly oversubscribed. The resulting pricing pressure makes these deals less attractive on a relative value basis.

MIM’s Second Half Outlook

• The deal pipeline is robust; we continue to see diversified global opportunities.
• 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 to help support financing needs via long-term partners.
• While competition for infrastructure assets has increased globally, we remain disciplined in analyzing and negotiating deal structure, focused on relative value across all investments.
• High selectivity, underwriting discipline and solid structures are cornerstones to help ensure resilience as MIM builds a client portfolio of private infrastructure debt transactions.

Private Structured Credit Market*

Record Issuance, Bullish Demand in Q2

• ABS market strength continued through Q2 with record issuance volumes met by equally bullish investor demand, as evidenced by deal upsize/oversubscription and spread tightening.
• Appetite for Esoteric ABS was particularly robust, with issuance up more than 40% YOY as the asset class gains interest from its potential for spread pickup relative to traditional ABS.
• While spreads have come in considerably across ABS this year, the pace of tightening has moderated.

MIM’s 3Q Outlook

• We continue to see high-level competition on the PSC side from both public and private investors, putting pressure on spreads. Despite this, spreads for investment grade-rated opportunities within PSC sectors offer attractive value on a relative basis.
• We expect PSC deal flow to remain healthy, with opportunities across asset classes in the consumer, commercial and alternatives financing segments.
• While headwinds including higher debt costs and inflation continue to stress the weakest borrower segment, low recession probability and labor market resilience remain supportive of overall ABS performance.

MIM Committed Transaction Activity¹

• MIM activity for Q2 2024 was $458 million in committed investments in the commercial, consumer 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.
© 2024 MetLife Services and Solutions, LLC

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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. L0824042983[exp0225][All States] Global