A much-anticipated private credit exchange-traded fund from Wall Street giants State Street and Apollo Global Management said it will change its name after the US Securities and Exchange Commission shared concerns over the ETF.
Responding to a Thursday letter from the SEC, the ETF tried to ease concerns from the regulator around liquidity, the fund’s name and its ability to comply with valuation rules, according to a Friday filing from attorneys for the fund, named SPDR SSGA Apollo IG Public & Private Credit ETF.
The SEC had said it was “misleading” to have Apollo’s name on the ETF, given Apollo does not have an obligation to sell any debt to the fund and it’s not an adviser or sponsor.
The fund’s lawyers said while they disagree that using “Apollo” in the ETF’s name is misleading, the name will be revised “as soon as practicable,” pending approval from the fund’s board.
Following the responses, SEC staff told the fund’s lawyers that they had no further comments “at this time,” according to a filing.
The firms also clarified that any of the fund’s illiquid products will not be exclusively tied to Apollo, the filing shows. Other broker-dealers can provide quotes for the private debt. On Thursday, the SEC said it had concerns that the ETF may not have sources of liquidity other than bids from Apollo, given private credit generally does not trade.
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The fund “will review and, if necessary, revise the registration statement disclosure to ensure that it is consistent with the above representation”, the ETF said in its filing.
“Following receipt of SEC comments, we have provided our responses and are pleased the SEC has indicated they have no further comments at this time,” a representative for State Street said in a response to Bloomberg News late Friday.
A representative for Apollo declined to comment beyond the filing while a representative for the SEC also declined to comment.
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The response came a little over a day after the ETF’s launch on Thursday, debuting on the New York Stock Exchange under the ticker “PRIV”. Private credit firms and investors eagerly awaited the fund, designed to bring direct lending to regular trading markets.
Apollo CEO Marc Rowan in particular has been predicting the convergence of private and public markets, noting there will come a time when people will question the difference between the two.
The ETF will cap investments deemed illiquid at 15% to conform with SEC requirements, but its private credit exposure is generally expected to comprise 10% to 35% of the portfolio, the fund’s registration statement shows.
Under a current agreement between State Street and Apollo, the credit giant is required to only provide three bids a day for a period of 15 minutes and is able to set the bid amount, according to the SEC’s latest letter.
