BSAI’s Private Credit Division analyzed whether private credit ETFs can truly provide liquidity while holding structurally illiquid assets. The report focuses on the tension between private credit, which usually involves long lock-up periods and limited secondary trading, and ETFs, which are designed for daily liquidity, intraday pricing, and easy investor access.

The analysis examines how private credit ETFs try to bridge the gap between investor demand for higher yields and the need for liquidity. It explains that private credit has become attractive because it can offer higher returns than traditional fixed income, especially after years of low interest rates and volatility in bond markets.

BSAI uses the SPDR SSGA IG Public & Private Credit ETF, known as PRIV, as a case study. The report highlights how PRIV combines public investment-grade debt with private credit exposure, while relying on Apollo Global Management to originate private credit assets and provide liquidity support through firm bid quotes and buyback commitments.

The report concludes that this structure creates important risks around valuation, liquidity, conflicts of interest, and regulation. While private credit ETFs may become a new generation of hybrid funds, BSAI argues that investor education, transparency, and stricter disclosure will be essential to prevent liquidity mismatches from becoming a source of market stress.