<Purnima>
BlackRock HPS Credit Strategies Fund, CREDX, is an income-focused, multi-strategy alternative credit fund, looking to deliver consistent income through a single investor point of access to both private and public credit markets.
<Jeff>
CREDX allows investors to access a diversified portfolio of assets on a fully funded basis, with daily subscriptions, low minimums and no subscription documents. The Fund offers potential monthly cash distributions and, as a continuously offered interval fund, limited quarterly liquidity via share repurchase offers. CREDX provides Form 1099 tax reporting, which simplifies tax administration for investors.
<Mike>
The fund is trying to capture a diversified set of investment opportunities across both private and public credit markets. CREDX invests in both corporate and real asset based private credit, with a principal focus on senior secured corporate direct lending. In the public markets, CREDX invests dynamically across performing liquid credit, opportunistic credit and structured credit. The integrated private-public approach and cross market flexibility is especially valuable as we see the borrowers increasingly move between markets for their financing needs.
<Purnima>
CREDX is designed to capitalize on the multi-trillion dollar private credit, liquid loan, high yield bond and structured credit investment opportunity set. It allocates to private markets to capture premiums from illiquidity and complexity, and to public credit markets that offer complementary income and total return opportunities.
<Mike>
The opportunity set in private credit has grown rapidly, with estimates that the market could reach $4.5 trillion by 2030. There is an observable yield pickup available in direct lending transactions versus broadly syndicated loans, driven largely by illiquidity and the bespoke nature of the financing that commands a premium.
<Purnima>
Within public credit, leveraged loans, high yield bonds, and structured products such as CLOs offer meaningful opportunities to generate income and total returns, with liquidity that allows for active credit selection and asset class rotation. These asset classes also offer the ability to capitalize on market volatility that can create particularly attractive entry points for investors.
<Jeff>
We pride ourselves on casting a wide net in order to maximize our potential investment opportunity set. The integrated BlackRock-HPS platform is a market leader with a large, global investment team that has comprehensive capabilities in both private and public non-investment grade credit. This scale provides broad origination channels, deep sourcing networks, and the ability to assess return opportunities across markets.
<Mike>
Within private credit, while we have active and robust sponsor coverage and sourcing in the private equity segment, we also pursue a diversified approach that emphasizes non sponsor origination through direct relationships, bank and advisory channels and joint venture partnerships. More than half of HPS’s historic private credit investments have originated from non-sponsor sourcing channels. We have historically found these financing opportunities to be less market environment dependent and less competitive, and we think they often offer relatively attractive risk-adjusted return potential as a result. We also believe our diversified sourcing approach helps us build more distinct portfolios.
<Jeff>
CREDX’s portfolio management process is driven by both top down and bottom up analysis. It emphasizes dynamic allocation of capital based on our continual assessment of risk and return across the entire opportunity set, rather than being constrained to one segment of credit markets. This relative value driven approach allows us to actively manage the fund to tilt toward private or public credit markets as opportunities, valuations, and macroeconomic and market conditions shift.
<Purnima>
Fundamental credit analysis is the core of our investment selection process. We use an analytically rigorous relative value approach across with a strong focus on managing downside risk. CREDX focuses on investments in first lien, senior secured debt across both private and public markets, with a weighting towards industries that we believe are more resilient across economic cycles. This approach is meant to support the fund’s goal of generating stable income, across market cycles while also protecting capital.
<Jeff>
Diversification is also a core design principle. Capital is deployed across a breadth of asset types, markets, and sectors including direct lending, asset based finance, opportunistic credit, performing liquid credit, and structured credit, allowing us to mitigate portfolio concentration risk.
<Purnima>
CREDX is a purpose-built, multi-strategy credit fund that integrates private and public credit. We believe our rigorous underwriting, relative value driven approach, and emphasis on diversification and capital preservation allows us to generate consistent income and attractive returns across market environments.
