A realistic look at direct lending in APAC
APAC’s direct lending market is on a growth path that many expect will follow the trajectories of the US and European markets. But given the widely differing legal systems, the dominance of bank lending in the region, as well other unique factors, the growth of direct lending is very uneven in APAC. Where the opportunities exist, increasing competition to lend may lead to less robust loan structures and decreasing returns on investments. Moreover, amid rising interest rates, and an increase in defaults as well as some questionable valuation practices, there is concern the direct lending asset class could deliver less than stellar returns.
- How have private lending funds fared in China, especially those that have exposures to the real estate sector?
- How are LPs able to monitor their investments given the opacity in loan valuations?
- How well equipped are direct lenders to deal with distressed situations, especially in an environment where defaults are on the rise?
- Which jurisdictions offer the best better risk/rewards, and which are the worst?
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