Investors Increasing Allocation to Private Credit in Asia: Survey Findings

Investors in Asia are showing a strong commitment to private credit as an asset class, with a recent survey revealing that a majority are currently allocating to it and even more are planning to increase their investments in the near future.

According to a poll conducted by investment firm Cambridge Associates, two in three investors are currently putting capital into private credit, and over 70% of respondents are looking to boost their allocations within the next 12 months. The survey, which involved 42 respondents from institutional investors, private clients, and family offices in Singapore and Hong Kong, highlighted the growing popularity of private credit as a diversifying investment option.

Among those with existing private credit allocations, more than half are investing in one or more private credit strategies, with senior debt, special situations, and distressed credit emerging as the most popular choices. Senior debt was identified as an existing strategy by over 60% of respondents, while special situations and distressed credit strategies were also favored by a significant portion of investors.

Looking ahead, senior debt, special situations, and distressed credit strategies are expected to remain top choices for investors seeking to increase their allocations in the next 12 months. This trend reflects a focus on capital preservation and return maximization, as investors navigate a landscape of higher base rates, reduced bank lending, and opportunities in stressed borrower situations.

Audrey The, managing director at Cambridge Associates, emphasized the attractive opportunities in private credit for Asia investors, noting higher yields, tighter covenants, and compelling opportunities in the middle market. She highlighted the importance of selecting managers with the ability to identify quality businesses in need of capital and structure creative solutions to generate attractive risk-adjusted returns.

Overall, the survey results point to a strong and growing interest in private credit among investors in Asia, as they seek to diversify their portfolios and capitalize on the unique opportunities offered by this asset class.