--- title: "PSERS’s Newmarket approval: who receives credit protection? | Altss Blog" description: "PSERS’s October 2026 approval concerns Newmarket credit protection and a separately scoped co-investment recommendation." canonical: "https://altss.com/blog/psers-newmarket-bank-credit-risk-transfer" --- [Altss Research](https://www.linkedin.com/company/altss) 3 min read Updated Nov 14, 2026 Share # PSERS’s Newmarket approval: who receives credit protection? PSERS’s October 2026 approval concerns Newmarket credit protection and a separately scoped co-investment recommendation. [Back to blog](https://altss.com/blog) Share [LinkedIn](https://www.linkedin.com/sharing/share-offsite/?url=) [X](https://x.com/intent/tweet?url=&text=PSERS%E2%80%99s%20Newmarket%20approval%3A%20who%20receives%20credit%20protection%3F) Copy link Pennsylvania’s school pension system, PSERS, [conditionally approved](https://www.pa.gov/content/dam/copapwp-pagov/en/psers/documents/board3/resolutions/2026/2026-44%20pserb%20resolution%20keystone%20partners,%20lp%20-%20newmarket%20structured%20credit%20solutions%20fund%20v,%20lp.pdf) on October 22, 2026 a commitment capped at $100 million through Keystone Series C into Newmarket Structured Credit Solutions Fund V LP, plus a Series B increase capped at $75 million. Ordinary, reasonable expenses are additional. Staff describe proposed first-loss infrastructure credit exposure without loan ownership; banks share losses and handle servicing and workouts. ## Where the protected loss sits The Basel Committee’s [February report](https://www.bis.org/publications/synthetic-risk-transfers.pdf) describes credit protection as a way for banks to manage capital needs and concentrated exposures while keeping their customer relationships. The protected layer can start with the earliest losses or sit above another loss-absorbing position. The contract therefore determines which losses an investor bears. Funding describes another side of that bargain. In a fully funded structure, the protection seller supplies cash or collateral covering the agreed protection amount upfront. That mitigates the bank’s exposure to the seller failing to perform. It does not turn the collateral into a guarantee of the investor’s principal. Consider a wholly fictional $100 million loan pool with a $10 million first-loss layer. The bank retains 20% of that layer and an investor prefunds protection on the other 80%. The investor therefore supplies $8 million. Assume an exactly $2 million net loan loss, settled immediately, with income, expenses, taxes and bank default excluded. The two participants share this loss in their stated proportions: $400,000 for the bank and $1.6 million for the investor. The loan losses remain within the specified first-loss layer. The investor’s prefunded amount falls from $8 million to $6.4 million. A 2% loss across the loan pool has consumed 20% of the investor’s initial exposure. These percentages measure losses on different amounts; neither is a fund return. The larger percentage does not require a bank default or borrowed money in this example. Prefunding makes the collateral available to satisfy the protection obligation. It is the means of paying the investor’s allocated loss, not a reserve that reimburses that same investor. ## What the investor retains A [March BIS Quarterly Review article](https://www.bis.org/publications/rise-and-risks-synthetic-risk-transfers_1.pdf) describes compensation for funded protection as a protection premium together with the return on collateral. Credit losses can reduce note principal or consume collateral. The relevant economic outcome is thus not simply the interest generated by the loans. It also reflects the protected layer’s losses and the financial structure used to hold that exposure. The authors distinguish direct bank-issued notes from other structures. Such notes are unsecured obligations of the issuing bank, adding that bank’s creditworthiness to the investor’s risk. Other arrangements can segregate collateral or use a third-party custodian. Knowing that protection is funded does not, by itself, establish whose failure could impair repayment to the investor. Servicing remains economically important after risk moves. The same article identifies reliance on banks for origination, loan administration and distressed recoveries as an operating advantage for investors. It also describes bespoke investments commonly held until maturity, sometimes subject to transfer restrictions. Access to bank-managed credit is therefore different from an immediately tradable loan position. Aksia’s September 23 recommendation for the co-investment [vehicle](https://altss.com/blog/apers-private-credit-fund-vehicle-tranches-fee-bases) relied on Fund V diligence, without reviewing vehicle-specific documents. This does not establish subsequent diligence. Fund V’s strategy cannot establish Series B’s individual loss-sharing contract; the board still requires satisfactory terms and legal review. 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