Asian investors continue to find private credit attractive with senior debt being the most popular sub-asset class, according to a Cambridge Associates poll.
Two in three Asian investors are currently allocating to private credit, according to a poll by Cambridge Associates. 70 percent are looking to increase allocations within the next 12 months. Of those with existing private credit allocations, more than half invest in one or more diversified strategies.
«There continues to be a robust opportunity for private credit in Asia investors’ portfolios amid a combination of factors such as higher base rates, a retrenchment of bank lending appetite and stressed borrowers,» said Cambridge Associates managing director Audrey The.
«Yields are higher and covenants and loan documentation are tighter, particularly in the middle market, than they have been in the 'zero rate' recent past, resulting in compelling opportunities across the asset class.»
Top Sub-Asset Class
Senior debt was the most popular investment within private credit with over 60 percent of respondents indicating that the sub-asset class was an existing strategy within portfolios. Special situations and distressed credit strategies were also popular, as indicated by nearly 25 percent of institutions and 50 percent of family offices.
«Senior debt as well as special situations and distressed credit strategies also remained top of mind for clients when asked which strategy they intend to increase allocation to within the next 12 months, suggesting that the objectives of capital preservation and return maximization were the key focus,» the report said.
The poll is based on responses from 42 institutional investors, private clients and family offices based in Singapore and Hong Kong.
