Finance

State Street, Apollo team up to launch first of its kind private credit ETF

Published

2 months ago

February 27, 2025

Business Finance News

Omar Marques | Lightrocket | Getty Images

There’s a new ETF in town. SPDR SSGA Apollo IG Public & Private Credit ETF (PRIV) will trade Thursday at the NYSE.

This fund intends to invest at least 80% of its net assets in investment grade debt securities, including a combination of public credit and private credit. What’s surprising is that there is a significant component of private equity in the ETF wrapper. Because private credit is illiquid, it has been a problem getting this in an ETF wrapper, since ETFs need liquidity.

They are trying to solve this problem by having Apollo provide credit assets and they will purchase those investments back if need be.

ETFs have owned illiquid investments in the past (there are bank loan ETFs that have illiquid investments) so this is not the first time this issue has been addressed. But Wall Street is eager to provide access to private equity and credit to the masses, and ETFs are the obvious wrapper.

Normally, ETFs are only allowed to own illiquid investments up to 15% of the fund, but the SEC says that in this case private credit can range between 10% and 35%, but can be above or below that.

This filing has been controversial. One early concern was that if Apollo is the only firm providing the liquidity, it naturally raises questions about what type of pricing State Street will get. However, State Street apparently can source from other firms if it can get better prices.

Another issue: Apollo is required to buy back the loans, but only up to a daily limit, and it’s not clear what happens after that. It’s not clear if the market makers would accept private credit instruments for redemption.

Bottom line: This is a groundbreaking but very complicated ETF. It will be closely monitored for liquidity.

Note: Anna Paglia, Executive Vice President, Chief Business Officer for State Street Global Advisors, will be on ETF Edge Monday to explain how this ETF works.

Finance

More Americans buy groceries with buy now, pay later loans

Published

4 hours ago

April 26, 2025

Business Finance News

People shop for produce at a Walmart in Rosemead, California, on April 11, 2025.

Frederic J. Brown | Afp | Getty Images

A growing number of Americans are using buy now, pay later loans to buy groceries, and more people are paying those bills late, according to new Lending Tree data released Friday.

The figures are the latest indicator that some consumers are cracking under the pressure of an uncertain economy and are having trouble affording essentials such as groceries as they contend with persistent inflation, high interest rates and concerns around tariffs.

In a survey conducted April 2-3 of 2,000 U.S. consumers ages 18 to 79, around half reported having used buy now, pay later services. Of those consumers, 25% of respondents said they were using BNPL loans to buy groceries, up from 14% in 2024 and 21% in 2023, the firm said.

Meanwhile, 41% of respondents said they made a late payment on a BNPL loan in the past year, up from 34% in the year prior, the survey found.

Lending Tree’s chief consumer finance analyst, Matt Schulz, said that of those respondents who said they paid a BNPL bill late, most said it was by no more than a week or so.

“A lot of people are struggling and looking for ways to extend their budget,” Schulz said. “Inflation is still a problem. Interest rates are still really high. There’s a lot of uncertainty around tariffs and other economic issues, and it’s all going to add up to a lot of people looking for ways to extend their budget however they can.”

“For an awful lot of people, that’s going to mean leaning on buy now, pay later loans, for better or for worse,” he said.

He stopped short of calling the results a recession indicator but said conditions are expected to decline further before they get better.

“I do think it’s going to get worse, at least in the short term,” said Schulz. “I don’t know that there’s a whole lot of reason to expect these numbers to get better in the near term.”

The loans, which allow consumers to split up purchases into several smaller payments, are a popular alternative to credit cards because they often don’t charge interest. But consumers can see high fees if they pay late, and they can run into problems if they stack up multiple loans. In Lending Tree’s survey, 60% of BNPL users said they’ve had multiple loans at once, with nearly a fourth saying they have held three or more at once.

“It’s just really important for people to be cautious when they use these things, because even though they can be a really good interest-free tool to help you kind of make it from one paycheck to the next, there’s also a lot of risk in mismanaging it,” said Schulz. “So people should tread lightly.”

Lending Tree’s findings come after Billboard revealed that about 60% of general admission Coachella attendees funded their concert tickets with buy now, pay later loans, sparking a debate on the state of the economy and how consumers are using debt to keep up their lifestyles. A recent announcement from DoorDash that it would begin accepting BNPL financing from Klarna for food deliveries led to widespread mockery and jokes that Americans were struggling so much that they were now being forced to finance cheeseburgers and burritos.

Over the last few years, consumers have held up relatively well, even in the face of persistent inflation and high interest rates, because the job market was strong and wage growth had kept up with inflation — at least for some workers.

Earlier this year, however, large companies including Walmart and Delta Airlines began warning that the dynamic had begun to shift and they were seeing cracks in demand, which was leading to worse-than-expected sales forecasts.