A recent report from Moody’s Ratings has revealed that private credit fundraising and deployment across Asia-Pacific are expected to slow over the next 12 to 18 months, as macroeconomic uncertainty, geopolitical tensions and elevated interest rates continue to dampen investor demand for illiquid assets.
Moody’s analyst Sean Hung said in a report that recent redemption requests across the global private credit market have intensified scrutiny of liquidity terms and could further curb new inflows into the APAC region, particularly from retail and wealth management channels, Bloomberg reported.
Withdrawal requests primarily driven by wealthy retail clients in private credit have continued into the second quarter, with no signs of letting up. Despite this, Moody’s Ratings expects the underlying demand for private credit in Asia-Pacific to stay resilient, supported by continued economic growth and the ongoing retreat of banks from higher-risk, capital-intensive lending activities.
"Private credit markets in APAC are less driven by retail-oriented structures and have less exposure to sector-specific risks. APAC’s economic growth and need for flexible financing should sustain strong private credit demand," the analyst wrote.
Regulatory security across APAC, along with a stronger focus on investor safeguards, is expected to slow capital-raising processes and limit the pace of fundraising in certain parts of the market, Moody’s noted.
Despite this, "structural funding gaps" across the region are likely to provide continued growth for the asset class over the long term.
Hung added that private credit assets under management in APAC are still projected to outpace growth rates in the U.S. and Europe on a currency-adjusted basis, even though the region’s overall market size is expected to remain significantly smaller than those of the developed markets.
Several firms in the space have launched private credit funds in Asia amid broader turmoil in the private credit market.
Ares Management (NYSE:ARES) is launching its second Asia-focused private credit fund, while Allianz Global Investors landed $744 million in investor commitments at the initial closing of its Allianz Asia Pacific Secured Lending Fund III.
KKR & Co. (NYSE:KKR) and Capital Group are working on the launch of a public-private credit fund. The fund, which will be launched in Asia this year, will target both public and private investments as a ‘’more liquid, cheaper, and more transparent" option, Capital Group CEO Mike Gitlin told Bloomberg.
Private equity firm EQT has raised $15.6 billion for its private equity Asia Fund, as investors seek diversification across both asset classes and regions. The fund, which received capital from 75 new investors, had originally sought to raise $12.5 billion when it was launched in 2024
Blackstone raised more than $12 billion for its Asia fund, while Bain Capital added $10.5 billion to its sixth buyout fund.
Photo: Shutterstock
Login to comment