Private credit fundraising and deployment in Asia-Pacific is expected to slow over the next 12 to 18 months as macroeconomic uncertainty, geopolitical tensions and elevated interest rates weigh on investor appetite for illiquid assets, according to a report by Bloomberg citing Moody’s Ratings.
Moody’s analyst Sean Hung said recent redemption requests across global private credit funds have increased scrutiny of liquidity terms and could temper additional inflows into APAC, particularly from retail and wealth channels.
Despite the near-term slowdown, Moody’s said underlying demand for private credit in the region remains robust, supported by economic growth and banks’ retreat from riskier and more capital-intensive lending.
Hung said APAC private credit markets are less exposed to retail-oriented structures and sector-specific risks than some global peers, adding that the region’s need for flexible financing should continue to support demand.
A number of APAC-focused private credit funds are currently in market, including a $1bn strategy from Värde Partners.
However, Moody’s said rising regulatory oversight and a stronger focus on investor protections, particularly for retail-distributed products, could lengthen fundraising timelines and constrain capital formation.
Moody’s expects APAC private credit AUM to continue growing faster than in the US and Europe, excluding foreign exchange effects, although the market is expected to remain significantly smaller than both regions.
