Some of America’s largest pension funds are looking to pour money into private credit to capitalise on dislocations across the market stemming from the coronavirus pandemic.

Both the $227bn California State Teachers Retirement System (Calstrs) and the $215bn New York State Common Retirement Fund have identified private credit as an opportunity for investors that have enough liquidity to lend to struggling companies.

Meanwhile, data from FT Specialist publication MandateWire shows that numerous other public funds in the US are also looking to make similar investments. For example, the $32bn Connecticut Retirement Plans and Trust Funds approved a $1.5bn allocation to private credit last month.

With US equity markets bouncing back from their mid-March lows, the best place to invest right now is in credit, which remains oversold, Anastasia Titarchuk, chief investment officer of the New York State Common Retirement Fund, said.

“Right now there are opportunities everywhere,” she added. “There are very few sectors of the credit market, aside from maybe investment grade, that have truly come back.”

Ms Titarchuk is especially interested in structured products like commercial mortgage-backed securities, where the uncertainty around regulations and whether or not tenants will be paying rent is creating a lot of dislocation in the market. However, the New York fund is planning on waiting on the sidelines until it has a better idea of how things will shake out, she added, noting that the fund puts a premium on being senior in the capital structure.

“We don’t gamble on outcomes where we don’t have any clarity,” Ms Titarchuk said. After surviving the 2001 recession and the 2008-09 financial crisis, Chris Ailman, chief investment officer of Calstrs, said it had employed similar tactics when markets started tanking this time.

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