WHAT ARE PRIVATE PLACEMENTS?
A good option for investors looking for secure, stable, contracted cashflows.
Private placements can be a good option for investors looking for secure, stable, contracted cash flows from companies with strong financial profiles. Private placements can also offer enhanced documentary protections for investors, typically greater than those offered by public bonds.
Private placements are unlisted corporate securities offered directly to a limited group of institutional investors rather than via public markets. Typical issuers are mid-sized companies with strong financial profiles, which either require funding infrequently and have no public credit rating, or do not wish to raise the scale of financing needed for the public debt markets.
WHY INVEST IN PRIVATE PLACEMENTS?
The benefits of investing…
Private placement investments offer regular and stable cash flows, so are well suited to long-term institutional investors. They have a limited secondary market, so they are most appropriate for those for whom liquidity is not a primary concern and can adopt a buy and hold strategy Investors in private placements can typically benefit from:
- Additional yield and better total return than comparable public bonds generated by illiquidity premium and fee income
- Enhanced structural protection diversity of opportunities through exposure to companies not found in bond indices
- Higher recovery rates than public bonds