The private credit market has not been popular in Asia until recent years when the public markets started to run out of steam. While investors struggle to identify value in the global markets and borrowers are financially stressed, private credit could be music to the ears of the Tiger.
China real estate debt restructuring has been a hot topic for over the past year, with almost none of the full-blown restructuring plans being announced or put in place yet, offshore creditors are feeling fatigued and have started to seek out ways to recover their position. This has given rise to a number of short-term private (di)stressed assets sales and financing opportunities in the region, especially in Hong Kong and China.
Arguably, we have only seen a handful of opportunities since the beginning of the year, but we shall expect more to come given the deteriorating credit quality in the real estate space.
For the time being, demand over supply gives an additional leverage to the borrower when it comes to the scarcity value, which in turns lead to a prolonged execution process - a seller's market.
Nevertheless, in this market, time is of an essence, and the future supply in the pipeline.
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