Guide to Private Credit in Asia Pacific

Investment Rating - The report indicates a positive outlook for the private credit market in Asia Pacific, highlighting its growing importance and potential for expansion [2][3][59]. Core Insights - Private credit is increasingly filling the financing gap created by higher funding costs and regulatory scrutiny on banks, particularly in the Asia Pacific region [2][3]. - The private credit market is expected to continue expanding, driven by institutional investors seeking returns and risk diversification [3][59]. - There is a notable trend towards sustainability-linked loans within the private credit sector, reflecting the growing importance of ESG considerations [4]. Summary by Region Australia - The private credit market is growing, filling the gap left by declining bank lending due to regulatory scrutiny [10]. - Sustainability-linked loans are expected to see steady growth [10]. Mainland China - The private credit market is becoming more active, with opportunities for offshore funds due to deregulation and increased foreign investment [12][13]. - Challenges include restrictions on borrowing by real estate companies and the need for court involvement for enforcement [13]. Hong Kong - The private credit market is expanding, with credit funds focusing on special situations [19]. - Non-banking entities can lend without a banking license under certain conditions [19]. India - The private credit market is gaining traction due to higher delinquencies faced by banks and liquidity issues in non-banking financial companies [30]. - Private companies can provide credit support for acquisitions, while public companies face stricter regulations [32]. Indonesia - The private credit market is growing, driven by increasing consumer demand and the expansion of financial services [33][34]. - Private credit is expected to play a significant role in financing economic development [34]. Japan - The private credit market remains limited due to strict regulations and the dominance of banks [38][39]. - Some alternative lenders are providing mezzanine financing in special situations [39]. Malaysia - The private credit market is constrained by heavy regulations, with most lending activities dominated by licensed banks [43][44]. - Offshore private credit transactions are more common during economic downturns [44]. New Zealand - The private credit market is gradually eroding the dominance of major banks, driven by international trends and increased awareness of private credit [48]. - Private credit is expected to continue growing as borrowers seek more flexible terms [48]. Philippines - The private credit market is developing, but lending activities are highly regulated [54]. - The Personal Property Security Act has improved the legal framework for secured transactions [54]. Singapore - The private credit market is experiencing significant growth, with credit funds increasing their portfolios [60]. - Funds can lend without a banking license under certain conditions, but must comply with local regulations [60][61]. South Korea - The private credit market is resilient, with government support addressing concerns about debt crises [64]. - There is a growing appetite for refinancing existing deals as interest rates are expected to ease [64]. Taiwan - The private credit market is limited due to strict regulations, but insurers are exploring lending opportunities [68]. - Foreign lenders face challenges in holding security over certain types of collateral [70]. Thailand - The private credit market is dominated by licensed banks, but foreign lenders can provide loans without a banking license under certain conditions [75][77]. - Companies can provide credit support for acquisitions, but must comply with legal requirements [77]. Vietnam - The private credit market is limited, with lending primarily conducted by licensed credit institutions [78]. - Offshore funds can provide loans without a banking license, but must navigate regulatory challenges [81].