The Asia-Pacific private credit market is projected to grow from about $59bn in 2024 to $92bn by 2027, representing a compound annual growth rate of roughly 16%, according to a report by Bloomberg. The report cites joint research from the Alternative Investment Management Association, in collaboration with the Alternative Credit Council, Simmons & Simmons, Ernst & Young, and Broadridge.
The expansion is driven by increasing allocations from institutions and wealth investors seeking yield and diversification, coupled with growing access via digital platforms. The research also highlights that Asia’s wealth management segment is a key source of new inflows into private credit.
In regional infrastructure emerging Asia, excluding China, faces an annual financing gap of $1.7tn. The research identified particular high growth areas for capital deployment as being renewable energy, transport, and digital infrastructure.
However, the research also noted that Asia’s private credit funds continue to face stiff competition from traditional lenders, who are able to offer loans typically 200 to 400 basis points cheaper than private debt, alongside services such as cash management and transaction banking. It noted that private credit firms gain their advantage in areas of the market typically underserved by local lenders, such as underbanked SMEs and mid-market borrowers.
