Beyond Convergence

A framework for navigating risk, liquidity, and relative value in a one-credit era

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Ask More of Public and Private Credit

Public and private credit are no longer separate investment domains; they form a continuum navigated by issuers and investors. PGIM's Beyond Convergence report introduces a framework for assessing relative value throughout the full opportunity set and supporting a consistent decision-making process across the credit continuum.

Asking More of Public and Private Credit

How much liquidity is needed—and when?

Not all public assets are liquid, and not all private assets are fully illiquid. When liquidity is treated as a label, it overlooks investors’ varying liquidity needs. In reality, liquidity is a spectrum, and each investor’s needs shift along it. What matters is whether cash can be raised when it’s needed—especially when trading conditions tighten and assumptions about exits are tested.

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Can relative value be assessed across the public‑private continuum?

Assets can carry similar credit risk but look different in pricing, liquidity, and reported outcomes. A three-layer approach—at the point of purchase, across markets, and in portfolio construction—helps uncover where compensation is genuinely attractive after accounting for differences in risk, liquidity, and complexity.

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How can public-market signals improve private-credit assumptions?

Some risks show up in prices immediately; others surface slowly through valuations and cash flows. To address data limitations and to provide investors with more realistic expectations of long-term return volatility, private asset classes can be mapped to comparable public assets for volatility and correlation assumptions. This approach produces more conservative and realistic portfolio estimates as opposed to solely relying on private asset return series.

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How does PGIM translate clients’ risk, liquidity, and relative value views into public-private credit allocations?

Moving from “we like this opportunity” to a resilient portfolio is where many frameworks break down. The challenge is converting relative value signals into position sizes and pacing decisions that stay consistent with an investor’s risk tolerance and liquidity constraints, while still allowing the mix to evolve as opportunities change across the credit continuum.

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This is a stylised summary of a complex themes and processes, provided for illustrative purposes only. Underlying assumptions and our views are subject to change.

Accessing Public and Private Credit

Credit Income

PGIM's best ideas across public and private credit

Credit Secondaries

Diversified exposure with return enhancement from discounts

Asset-based finance

Income generation through collateral‑backed lending to the real economy

Direct Lending

Senior secured, floating‑rate middle‑market loans

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Public multi-sector strategies

Flexible fixed income strategies built to navigate changing markets

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Featured Offerings

PGIM Global AAA CLO Fund

Stable income and enhanced diversification 
The Fund provides diversified exposure to high-quality U.S. and European CLOs, offering low correlations with bonds, favourable liquidity, and minimal default risk.

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PGIM Multi-Sector Credit Fund

A best idea approach to global credit 
The Fund employs a relative-value approach emphasising credit opportunities across global sectors and derivatives, resulting in diversified fixed income exposure with alpha potential. 

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PGIM Emerging Market Blend Debt Fund

A disciplined blend of EM opportunities

A research‑driven blend of EM sovereign and corporate debt designed to deliver income and capital appreciation.

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Views on the credit continuum

Capturing Alpha Across the Credit Continuum

Featuring Greg Peters, Co-Chief Investment Officer and Co-Head of Multi-Sector Strategies

Credit has structurally changed—complacency is high, recoveries may be lower, and volatility is creating compelling opportunities across public and private credit.

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Relative Value Across the Credit Continuum

Featuring Guillermo Felices, PhD, Global Investment Strategist

The fading distinction between public and private credit means assessing relative value has grown more complex. Investors may benefit from a framework that looks across the credit continuum in search of the best opportunities.

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Data, Complexity, and the Credit Continuum

Featuring Tom McCartan, FIA, CFA, Multi-Sector Portfolio Manager

Combining public and private credit in a single portfolio requires more than access; it requires discipline, judgement, and scale.

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Talking public-private portfolios

In an armchair discussion, Greg Peters and Tom McCartan share views on why combining public and private credit is trickier than it looks—and why simple labels tend to fall apart in practice.

Apple
Spotify
Amazon


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Contact your dedicated PGIM representative to discuss how you and your clients can build portfolios that access the full credit spectrum.

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References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities. The securities referenced may or may not be held in the portfolio at the time of publication and, if such securities are held, no representation is being made that such securities will continue to be held.

 

The views expressed herein are those of PGIM investment professionals at the time the comments were made, may not be reflective of their current opinions, and are subject to change without notice. Neither the information contained herein nor any opinion expressed shall be construed to constitute investment advice or an offer to sell or a solicitation to buy any securities mentioned herein. Neither PFI, its affiliates, nor their licensed sales professionals render tax or legal advice. Clients should consult with their attorney, accountant, and/or tax professional for advice concerning their particular situation. Certain information in this commentary has been obtained from sources believed to be reliable as of the date presented; however, we cannot guarantee the accuracy of such information, assure its completeness, or warrant such information will not be changed. The information contained herein is current as of the date of issuance (or such earlier date as referenced herein) and is subject to change without notice. The manager has no obligation to update any or all such information; nor do we make any express or implied warranties or representations as to the completeness or accuracy.

 

Any projections or forecasts presented herein are subject to change without notice. Actual data will vary and may not be reflected here. Projections and forecasts are subject to high levels of uncertainty. Accordingly, any projections or forecasts should be viewed as merely representative of a broad range of possible outcomes. Projections or forecasts are estimated based on assumptions, subject to significant revision, and may change materially as economic and market conditions change.

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