BofA commits $25 billion to private credit deals, memo shows | ReutersSkip to main content[Exclusive news, data and analytics for financial market professionalsLearn more aboutRefinitiv]Bank of America logo appears in this illustration taken December 1, 2025. REUTERS/Dado Ruvic/Illustration/File Photo [Purchase Licensing Rights, opens new tab]Feb 19 (Reuters) - Bank of America [(BAC.N), opens new tab] is committing $25 billion to private credit deals, according to an internal memo seen by Reuters.Traditiona ...

Mumbai: The State Bank of India is weighing a plan to take control of its investment-banking joint venture (JV) with Investec India, according to two people familiar with the matter. The move comes as India’s largest lender seeks to strengthen its deal-making and distribution capabilities in the midst of a multi-year boom in the country’s equity capital markets. SBI is considering raising its stake to 51% from about 20% after an earlier attempt to raise the stake to 40% was rebuffed by the Reserve Bank of I ...

Core Insights - The discussion highlighted that while crypto-native tools have advanced, institutional finance evaluates risk differently, focusing on failure risk rather than functionality [1][5][6] Group 1: Institutional Perspectives - Institutions prioritize understanding how systems can fail rather than if they work, indicating a cautious approach to adopting new financial infrastructure [6] - The assessment of risk in a fragmented, cross-chain environment is a significant barrier to institutional participation in tokenized yield products [5][6] Group 2: Fragmentation and Interoperability - Fragmentation across blockchains is viewed as an economic drag, affecting liquidity and capital efficiency, which could limit the effectiveness of tokenized assets even at a trillion-dollar scale [7] - Winning platforms will be those that can mask fragmentation from end users, similar to how the internet operates on standardized protocols [8] Group 3: Execution Risk and Institutional Engagement - Institutions prefer to offload execution risk, with intent-based architectures allowing them to specify outcomes while specialized solvers manage liquidity sourcing [9][10] - This approach enables access to public blockchain liquidity while maintaining compliance and settlement guarantees, which are critical for institutional adoption [10] Group 4: Current Trends in RWA Adoption - Yield-bearing products, such as tokenized Treasuries and private credit, are currently leading the on-chain adoption of real-world assets (RWAs) [11][12] - There is significant demand for these products as traditional finance seeks to diversify yield strategies away from purely crypto-native approaches [12] Group 5: Regulatory Considerations - Regulatory concerns around smart contracts and emergency controls are significant, with institutions requiring standardized and visible safeguards to commit capital at scale [14] - The existence of emergency pause mechanisms in DeFi protocols is seen as a necessary control rather than a hindrance to decentralization [14] Group 6: Two-Way Capital Flows - RWAs are facilitating two-way capital flows, with traditional institutions exploring on-chain yield while crypto-native capital seeks exposure to real-world income streams [15][16] - The infrastructure for these flows is being developed to support both directions, indicating a convergence of traditional finance and crypto [16]

Core Insights - Municipal bonds are providing elevated returns in 2025, with yields around 6% to 7%, which are historically high, making them attractive for high-net-worth clients [1] - The securitized sector, including agency and non-agency mortgage-backed securities, is considered an attractive investment area due to tight spreads with US Treasuries [2] - Advisors are focusing on fixed income investments, emphasizing quality and tailoring guidance to client-specific needs [3] Municipal Bonds - High-net-worth clients are encouraged to extend maturities in municipal bonds due to their competitive yields [1] - The market's performance will depend on supply and demand dynamics, with expectations of improved conditions compared to the previous year [1] Securitized Sector - Both agency and non-agency mortgage-backed securities are viewed as good investment options, but require extra due diligence due to the lack of government guarantees [2] Fixed Income Strategy - A general theme among advisors is to prioritize quality in fixed income investments, with a focus on not stretching for income [3] - The bond market is expected to steepen, indicating potential volatility in long-term bonds [6][7] Inflation and Interest Rates - The correlation between fixed income and equities has turned negative, which is beneficial for diversified portfolios [4] - The Federal Reserve may ease monetary policy, but interest rates are not expected to return to pre-COVID levels [4] High Yield and Private Credit - There is a slight increase in allocation to high yield bonds, with over 50% rated double B or higher, indicating improved credit quality [8] - Diversification remains crucial, and while high-yield bonds are not being avoided, there is caution against chasing yields [9] - Private credit is seen as valuable, with a focus on high quality and strong management, despite market growth and potential risks [9][10] Investment Outlook - The expectation is for rates to continue to fall due to slowing inflation, with a normalization of the yield curve [5] - Companies are cautious about long-term US Treasuries amid potential market volatility and inflation risks [6]

Core Insights - Financial advisors are adapting their retirement investment strategies due to a volatile market and economic uncertainty, with two-thirds reporting changes in their advice [2][9]. Economic Factors Influencing Changes - Rising inflation, uncertainty surrounding Social Security and Medicare, and overall cost-of-living concerns are prompting advisors to adjust their conversations and strategies [3][9]. Client Strategies and Recommendations - Advisors are encouraging clients to reconsider their withdrawal strategies and create buffers against market volatility, including phased retirement or part-time work for stability [3][4]. - There is an increased focus on building cash buffers and revisiting asset allocation models to mitigate sequence risk, which is the risk associated with the timing of withdrawals from retirement accounts [5][6]. Sequence Risk and Retirement Planning - Sequence risk can significantly impact retirees who rely solely on their portfolios, especially during bear markets, leading to potential alterations in retirement plans [7]. - Advisors emphasize the importance of understanding individual spending needs to create sustainable retirement plans, as there is no universal withdrawal rate applicable to all clients [8]. Asset Management Strategies - Financial advisors are recommending the creation of "safe buckets" that hold one to three years of income in cash or near-cash assets to buffer against market volatility [9]. - There is growing interest among clients in guaranteed income solutions like annuities, tax-efficient strategies, and flexible spending accounts for healthcare costs [10]. - Advisors are exploring alternative investments such as private credit, private real estate, and private equity to enhance yields and diversify portfolios beyond traditional stocks and bonds [11].

Core Viewpoint - Sompo Holdings Inc. is shifting its investment strategy towards higher-yielding overseas credit to enhance profits as traditional business struggles in Japan's mature insurance market [1][5]. Group 1: Investment Strategy - The company is reallocating investment managers from its Japan insurance subsidiary to the US to optimize costs and leverage the same asset managers for private credit and junk bond deals [2]. - Sompo aims to invest broadly in credit assets that offer high profitability and diverse risk-return characteristics, emphasizing the growing importance of asset management for profit generation [3]. Group 2: Market Performance - In the fiscal year ending March 2025, Sompo's total operating revenue increased by 4.7%, driven by an 8.6% rise in overseas revenue, while domestic revenue growth was limited to 1.9% [6]. - The domestic insurance market has seen stagnant growth due to an aging population affecting demand for auto and home insurance products, prompting insurers to seek expansion in international markets [5]. Group 3: Industry Context - The Japanese non-life insurance sector is under pressure from rising natural disasters and repair costs, which threaten the auto insurance business amid significant inflation [9]. - Sompo managed ¥13.4 trillion ($85 billion) in assets as of September last year, the smallest among Japan's top three property and casualty insurers, indicating a potential shift towards riskier but higher-yielding overseas credit will be closely monitored by investors [10]. Group 4: Market Dynamics - The global private credit market has reached $1.7 trillion, with lending spreads narrowing due to increased competition; however, Sompo finds the debt attractive due to wider spreads compared to other credit products and a floating-rate structure that mitigates risks from rising interest rates [11].

Core Viewpoint - The investment landscape is undergoing significant changes, with traditional norms in portfolio construction and risk management being reexamined and often overturned [2] Group 1: Investment Themes - Mercer categorizes future investment themes into three categories: regime change, supercycles, and megatrends, each presenting unique risks and opportunities [3] - Some themes may only be suitable for investors with high governance capacity and expertise, particularly in private markets [3] Group 2: Private Assets - Private assets have been promoted as a key diversifier, with a growing trend towards retail-friendly products and political discussions in New Zealand [4] - The allocation to private markets in New Zealand is expected to grow from the current 2-3% to potentially 15-20%, aligning with Australian levels [5] - Mercer NZ currently has about 8% of its diversified funds allocated to private assets, which is expected to increase [6] Group 3: Specific Investments - Mercer NZ and Australian funds jointly invested in the Highbrook Park logistics centre, acquiring a 13% stake in an asset valued at $2.1 billion [7] - The private credit asset class represents about 2% of the NZ funds, despite some regulatory concerns in jurisdictions like Australia [8] Group 4: Manager Strategy - Mercer NZ utilizes 16 private credit managers and typically aligns with the global parent’s manager pool, but has made exceptions to better suit local needs [9][10]

Group 1 - Webster Financial Corporation's division, HSA Bank, has acquired SecureSave, enhancing its product offerings and positioning it as one of the largest employer-sponsored emergency-savings account providers in the U.S. [1] - The acquisition reflects Webster's commitment to strengthening its Healthcare Financial Services segment and aims to meet clients' evolving financial-wellness needs [2]. - By integrating emergency savings accounts, HSA Bank transitions from a health-account administrator to a holistic financial-wellness provider, unlocking cross-selling potential and enhancing customer retention [3][9]. Group 2 - Recent acquisitions in the financial sector include Franklin Resources' acquisition of Apera Asset Management, increasing its alternative credit assets under management by over $90 billion [4][5]. - Rocket Companies completed a $14.2 billion acquisition of Mr. Cooper Group, managing $2.1 trillion in mortgages for nearly 10 million clients, enhancing its service scale and client relationships [6][7]. Group 3 - Over the past six months, Webster Financial's shares have increased by 3.6%, contrasting with a 1.4% decline in the industry [8].

Core Insights - The Real World Asset (RWA) sector valuation reached $34.4 billion, marking an 11.6% increase and a $3.9 billion rise in total deposits over the last 30 days [1] - Despite a challenging crypto market, the RWA sector demonstrated resilience, with tokenized debt, commodities, and private credit products attracting inflows as investors sought yield stability amid macroeconomic uncertainty [2] RWA Sector Performance - Private credit constitutes the largest RWA category, accounting for 51.4% of the total market at $17.3 billion, with U.S. public debt and commodities contributing nearly half of the $3.9 billion in new deposits [3] - Tokenized U.S. debt instruments increased from $7.5 billion to $8.3 billion since the start of October, driven by accelerated tokenization following the U.S. government shutdown [4] - Commodities-backed RWAs rose from $2.1 billion to $3.2 billion, influenced by Gold's rally to $4,200, with U.S. Treasuries and Commodities together seeing $1.9 billion in inflows, representing 51% of all newly tokenized assets in the last 30 days [4] Market Dynamics - Increased liquidity in the RWA sector has led to significant gains for token holders, with the aggregate market cap of tokenized projects rising to $6.78 billion, an 8.3% increase intraday, contrasting with the broader crypto market's 0.6% uptick [5]

Group 1 - David A. Johnson is the founder and principal of Endurance Capital Management, a New Jersey Limited Liability Company, with over 30 years of experience in investing [1] - The investment strategy includes stocks, bonds, options, ETFs, REITs, real estate, closed-end funds, hedge funds, and private credit [1] - David holds a Master of Science (MS) Degree in Finance, a Certificate in Financial Planning, and an MBA from Fordham University [1]