Private credit investors are increasingly pivoting from saturated Western markets to emerging economies, drawn by higher yields, less competition, and a growing pool of bankable projects, according to a report by Reuters.
Emerging market managers such as Gemcorp have stepped in to fund large-scale infrastructure and corporate projects, filling gaps left by banks and declining bilateral lending. Gemcorp co-founder Felipe Berliner highlighted private credit’s flexibility, noting that in many cases, “we are the only lender.” Notable deals include Angola’s new $475m fuel refinery, a wind farm in Kenya, and cross-border power transmission projects in Southern Africa.
Investors point to attractive risk-adjusted returns in EM private credit. Matt Christ, portfolio manager at Ninety One, said yields in emerging markets are 150–300 basis points higher than in developed markets, while default volatility is often lower than perceived. Gramercy’s head of capital solutions, Gustavo Ferraro, added that EM risk profiles and returns have surpassed those in the US, with the firm doubling its private credit exposure to $4.8bn over five years.
Asset-backed structures dominate EM lending, spanning corporates, sovereigns, and quasi-sovereigns, with flexible repayment terms tailored to borrowers’ needs. New initiatives include Gemcorp’s $1bn fund targeting mid-market Saudi companies, underscoring the appetite for bespoke financing solutions.
