When reporting performance to investors, private debt managers typically address the challenge of illiquidity in the following ways:
- Providing regular financial statements: Private debt managers typically provide financial statements of the borrower issuing the private placement debt on a regular basis to investors 1 . These statements can help investors understand the performance of their investments and the liquidity of the underlying assets.
- Using backward-looking analysis: Private debt managers typically use backward-looking analysis to present performance and attribution reporting to investors 2 . This approach can help investors understand how their investments have performed in the past and can provide insight into the liquidity of the underlying assets.
- Streamlining workflows: Private debt managers may use a fully integrated private debt solution to enable credit managers and direct lenders to streamline workflows and enhance performance by supporting more active and informed decisions around pipeline and portfolio management, compliance, and risk 3 . This can help managers more effectively manage illiquidity risk and provide more accurate and timely performance reporting to investors.
In summary, private debt managers typically address the challenge of illiquidity when reporting performance to investors by providing regular financial statements, using backward-looking analysis, and streamlining workflows. By addressing this challenge, private debt managers can help investors make informed investment decisions and protect themselves from the risks associated with private debt investments.