IFR Asia Asian Private Credit Markets Roundtables 2025: Transcript
IFR Asia: Let’s open things up, because private credit is a term that’s thrown around like artificial intelligence – it means different things to different people, and not everyone uses it correctly. So, what does private credit mean in the context of Asia, and how does that differ from the US and Europe?
SJ Lim, KKR: Private credit to me means anything transacted outside of banks, which historically have been the key intermediaries for corporates that want to borrow.
It’s non-bank, privately negotiated, and while it can be intermediated, it’s often a direct relationship between borrower and lender. It’s hold-to-maturity, so for investors like myself, you’re not trying to trade the instrument; you’re making an investment in the business.
In Asia, there’s a lot of talk around private credit. It’s encouraging to see so much interest, and no surprise that a lot of capital has poured into private credit in the last two to three years – it’s now mainstream globally.
But in Asia, it’s still nascent. Structurally, we think it will follow the path of the US and European markets in terms of expanding financing tools for businesses. But here it’s still new, not widely understood, and that’s where the excitement is. It’s a growth market. We’re about 5% of global private credit assets under management, while Asia is 50% of GDP and two-thirds of global growth. It’s a dynamic region where banks still dominate, so there’s room for creativity, innovation, and growth.
Celia Yan, Apollo: Private credit is a term people interpret differently. From my experience across the region, we started by talking about special situations as part of private credit, then direct lending, and now private IG is also considered private credit.
The context in Asia is similar to the US and Europe, but the stage of development is very different. In a previous role, my title was head of APAC private credit; now I’m head of APAC hybrid, and people ask, “What is hybrid? What is private credit?” I’ve been explaining my role a lot – special situations, private credit, hybrid.
Hybrid is not only part of private credit, but also a natural extension of it – sitting across credit and equity as an all-weather solution. Our strategy invests from opportunistic credit to structured equity across real estate and corporates. I recently joined Apollo to develop this strategy. Our ambition is to provide flexible solutions for corporates and sponsors across funding needs. That’s the nature of private credit: you need to be creative, negotiate bilaterally, and structure deals to fit the specific situation. We also see a trend toward more standardised, flow-type private credit, like investment grade. Asia is still at an earlier stage, but the evolution will be similar.
Indranil Ghosh, Cerberus: SJ and Celia have covered what private credit means, so I’ll focus on how it’s different in Asia.
The fundamental difference is that banks in Asia are still banking. Unlike the West, where banks have largely stepped away from lending, banks here have deep balance sheets and like backing large, high-quality sponsors in their home markets and the region. That’s a major difference.
Another difference is that Asia still has a substantial emerging-markets component. In Latin America or Eastern Europe, direct lending isn’t a big part of the market. In Asia, you deal with many different markets. Asia isn’t one homogeneous region. Every country has different regulations and different needs for private credit within the capital structure. Australia is senior secured, Japan is mezzanine, India is special situations. It’s a collection of very different markets, and professionals who take on Asia private credit deserve applause.
IFR Asia: So, in Asia the situation is different from the West – banks are flush with liquidity. Does that mean private credit is displacing bank lending, or doing something new?
Sajal Kishore, Fitch: Some of these points have been touched on, but I don’t see private credit replacing banks. It’s still very complementary. Banking in Asia is still relationship-led, and that won’t go away.
There will be opportunities where banks do traditional financing well, but private credit can step in when there are challenges around size, sector, or credit profile. There are also opportunities in times of market stress, refinancing stress, higher leverage needs, or when sponsors require flexible capital.
Private credit will play a role, but it won’t replace banks.
Abhishek Tiwaari, Nomura: The simple answer is that private credit expands the overall liquidity available in the market. Ten years ago, the pools of capital were banks, special situation funds, and equity. Now there are many more pools of capital from inside and outside the region, expanding what was previously available. It’s an expansion of capital and of the diversity of capital solutions.
As far as event financing is concerned, there can be two alternatives, but one solution.
You can see replacement in Australia – a large part of buyouts, refis, and recaps has moved into the hands of private credit. That’s a clear replacement. But that’s not the case in other parts of the region, sometimes for emotional reasons, sometimes regulatory. There, banks and private credit coexist, often in the same structure – banks providing senior secured, private credit providing junior or hybrid capital.
IFR Asia: Celia, when you come into transactions, do you see yourselves filling gaps that the loan or public bond market can’t fill?
Celia Yan, Apollo: Apollo’s approach is to work in partnership with banks. Internally, we often talk about bank partnerships – globally, we have 12 key partnerships with banks – because the market increasingly demands innovative solutions. We can be innovative, but we value banks partnering with us in origination, because banks sometimes know corporates better than we do. We have a very strong origination platform, but bank relationships remain important.
We also partner with banks with significant risk transfers (SRTs). We have different risk appetites and can take different parts of the stack – senior or junior – depending on the situation, and we work with banks and corporates together to determine what fits. So, we focus on complementing, not competing.
IFR Asia: Let’s talk about where the action is happening. Where do you see the action in terms of geography or industry?
Sajal Kishore, Fitch: At Fitch, we initially saw activity across non-bank financial institutions globally, but in recent years it has spread across product groups: corporates, structured finance, structured credit, infrastructure, subscription finance, fund finance, NAV (net asset value) loans, data centres.
From a ratings perspective, we see three drivers: structured transactions that invest in private credit, like CLOs (collateralised loan obligations), which may require public ratings; where ratings are needed for regulatory capital or risk-management purposes, including allocations from pension or insurance investors; and a recent trend, the acceleration in the distribution of private credit assets across club deals, funds, or aggregated transactions, where ratings provide transparency and support pricing and distribution.
More broadly, a lot of these transactions are often complex and bespoke. They don’t fit neatly into one criterion; they may mix elements of credit-linked notes, structured finance, infrastructure, or corporates. So, there is a mix of different criteria we need to look.
We recognised this trend early and created a global cross-functional group four or five years ago to assess these transactions and give them a proper home. That will continue.
IFR Asia: Abhishek, in which countries or areas are you seeing the most activity?
Abhishek Tiwaari, Nomura: Three to five years ago, we would have said India and Australia for sponsor-related situations. Beyond sponsors, it was the same countries along with some in South-East Asia, and then there was China before the slowdown.
Now, with diversification in the private credit offering and the emergence of new sectors and asset classes – data centres, driven by cloud and AI; renewables; warehouse financing in Australia; NAV financing – we’re seeing activity in Japan, Korea, South-East Asia, and Malaysia, which weren’t traditionally active markets.
Larger and more diversified capital pools are opening a wider set of opportunities across the region.
IFR Asia: Celia, where are you spending most of your time?
Celia Yan, Apollo: I liked Indranil’s comment about managing APAC – we’re managing 12 or 13 different countries. I just came back from New York, and our leadership asked, “What’s your key market?” and I said, “There are 12 to 13 – I have to stage them.”
Historically, China was a key driver. Now China is slowing. Australia is a key market for us — the comfort level, legal system, and jurisdiction make it easier for global managers, though it’s very competitive. India is absolutely a key market. I’ve been travelling there almost monthly. It’s a growing economy with opportunities across sectors and situations, and Indian entrepreneurs are making outbound acquisitions similar to China 5–10 years ago.
Japan is also key. From a private credit perspective, it’s hard to address – low cost of funding but higher return-on-equity demands – which creates a gap for hybrid solutions.
Singapore is another focus. It’s our regional hub, strategically important, and we recently won the Enterprise Singapore mandate. We want to help companies with domestic expansion, global expansion, and succession planning. Japan, Hong Kong, and the five South-East Asian countries will continue to grow for us, but at a different pace.
Indranil Ghosh, Cerberus: Broadly it breaks into DM and EM.
In DM, Australia and New Zealand are front and centre. People are figuring out where to play in Japan’s cap stack, and maybe South Korea.
In EM, India is the leader. People are assessing Indonesia and Vietnam, and several other South-East Asian markets.
Hong Kong will have interesting opportunities, though not everyone has the capital to pursue them.
I also want to echo Abhishek: a lot is no longer country-specific. AI data centres and energy transition require huge amounts of capital. Every market has different use cases. There’s enough opportunity for everyone in this sector.
SJ Lim, KKR: Something helpful might be to look at our activity over the last 12 months. We are a pan-Asia investor – we have people in every location and that’s across DM and EM – and this year we’ll likely do transactions in every market. We divide Asia into six clusters, and we expect at least one deal in each.
Deal count is highest in Australia – it’s the most predictable, regular-way, flow market – and that’s mostly direct lending. We’ve also done asset-backed deals, so there’s horizontal expansion.
Elsewhere, as the others have said, you need a localised playbook for each market to figure out the white space, the right industries, and the best sectors. That’s the tapestry of Asia.
This isn’t a single market or geography. There is a certain “Asian-ness” in the capital gap and the role private credit can play.
IFR Asia: Indranil, the Reserve Bank of India has proposed rule changes to make M&A funding easier for local banks. There are still many restrictions, and the final rules aren’t out, but how do you see this affecting banks? Are they going to cut into the deals you would do, or is this an opportunity?
Indranil Ghosh, Cerberus: For context, banks in India are currently not allowed to acquisition-fund. That is being reviewed.
The RBI is proposing that the senior secured piece for acquisition financing, which was funded mainly through foreign banks and to some extent mutual funds, be opened up to Indian banks and they could play more of a role in the senior market.
Private credit currently plays more in the mezzanine layer – loans beyond 5x Ebitda. That space remains open to private credit as Indian banks won’t lend beyond that leverage.
So, that means minimal near-term impact on private credit. The second and third-order effects are unknown. With mutual funds pushed out of the senior space, will they increase risk tolerance and move into private credit territory? Maybe, but I doubt it.
The RBI has also proposed opening up foreign-currency borrowing. External currency borrowing (ECB) was previously restrictive – a relic of a time when India lacked sufficient FX reserves to service the debt. This is very interesting for private credit.
Most of our capital is in dollars, and we would prefer to invest in dollars. The two drags in India for private credit are hedging costs and withholding taxes and the proposed regulation changes remove both. It will enable us to lend up to US$1bn in dollars at market-determined pricing, so I think there will be some reduced cost to the end borrower as a result.
More importantly, it opens up the playing field significantly to firms like ours and that makes India much more interesting.
IFR Asia: Sajal, will it have implications for infrastructure funding?
Sajal Kishore, Fitch: The ECB changes are dramatic – expanded scope of borrowers and lenders, removal of price caps, market-based pricing, simplified tenors and maturity, and simplified end-use restrictions.
This opens up the market, and it’s a positive and overdue development. I expect increased flow as issuers tap into this funding.
Abhishek Tiwaari, Nomura: The direction of travel is positive.
More capital and fewer restrictions are positive for the economy, improving access to capital and enabling corporate M&A activity that may previously have been limited by size or regulation. How it will affect individual players – private credit or banks – will depend on the fine print, which is still evolving.
The details matter, but the overall direction is positive for the ecosystem.
IFR Asia: SJ, in what countries are you still finding it difficult to do private credit deals?
SJ Lim, KKR: I can talk about Japan and China – the two elephants in the room. Japan is going through an inflection point with corporate reform and activism. We’ve seen that in our PE business, which has been there for close to two decades. We just did our first corporate deal, a generational transition story where we came in with a hybrid instrument.
So, within the broader theme of corporate reform and partnership capital – where you’re not trying to be the cheapest but actually bring value-add and structured, less-dilutive instruments – there’s definitely a lot of opportunity.
Trust is important. It’s a very relationship-driven market. You need to be local. But if you have those elements, managers like us have a role to play, and there is deal flow.
It’s a very big economy going through this moment. Managers like us and other international players see this as a structural story worth investing resources in. We’re adding people and so are others. Day to day, it’s still a very crowded, very liquid, domestic-centric market. But Japan is exciting – not in the next three months, but over three to five years – and it will happen, though in a way that’s customised to local conditions.
There’s still a lot of liquidity in the banking system, so why look for opportunities in an area that is well supplied? But there are pockets: mezzanine or stretch senior, hybrid capital, asset-backed, and more. Even large corporates looking for structured capital don’t necessarily need access – they already have abundant access to banks and bond markets. But they may want something more bespoke. Private IG or what we call structured opportunities will be interesting as the capex cycle unfolds.
Turning to China, there’s a common view that it’s very difficult, and clearly, as a global general partner (GP) – a US GP – the macro backdrop has changed significantly over the last several years. We are micro investors, so we need to understand the economy, and we have been proactive in adapting to the new economic structure and are taking a highly localised approach to investing in China.
Some limited partners (LPs) simply won’t allocate to China. But China is 50% of Asia; and the increase in intra-Asian trade is one of the mega themes we see playing out. China is going through its own structural transformation, which will require capital and generate new industries and national and global champions. That requires capital and partnership.
It’s a long-term structural story. We remain committed in China, actively deploying capital with boots on the ground. But near term, the crystal ball is hazy.
IFR Asia: Countries like Indonesia haven’t come up in this discussion. Do you think there is a big opportunity there?
Indranil Ghosh, Cerberus: It’s a big economy. Traditionally, we’ve found it difficult because of the enforcement regime, rule of law, and interactions with state-owned bank creditors. Those are factors that need to be understood. Also, a regime change in Indonesia always requires, for credit investors, a cooling-off period to see where things settle, and Indonesia is going through that now.
Many businesses are interesting. Some families have run them for decades. So, like India, there could be opportunities, but it’s hard to see how that happens onshore in the immediate future. Maybe in a couple of years, once enforcement – especially for foreign creditors – becomes clearer.
IFR Asia: Are there countries in the region where you can’t do the kinds of structures you’d like to?
Celia Yan, Apollo: We want to grow our Asia-Pacific business, so we remain open on where we want to allocate. Over the past few years, the common challenge for those of us focused on APAC, especially emerging markets, is global relative value.
In Asia, investors look for compensation for legal risk, currency risk, and, with high base rates, global investors compare us to the US. In India, for example, after withholding tax and hedging, high-teens returns become low teens. Global investors then ask why they should take Asia risk for similar returns to the US, where risks are more familiar.
That has been the challenge. But I see the trend changing, especially for global managers of scale. Asia is a region we must grow in, with many opportunities and untapped areas. But we need to focus relative value and continue engaging global allocators. Capital is global, but our region isn’t familiar to many of them.
I’m glad we have many private credit investors here discussing the region; it helps gather regional investors, share views, demonstrate local track records, and explain how we mitigate risks in different legal regimes. Structuring skills and track record will help build confidence and attention. So, it’s not just that certain markets are difficult – it’s the overall perception of the region.
IFR Asia: Abhishek, are there certain countries or industries that you find challenging?
Abhishek Tiwaari, Nomura: Any place that’s opaque – judicial systems, regulations, anything muddy – is uncomfortable. And even developed markets like Australia have things to be careful about.
Indonesia is challenging. Vietnam isn’t easy. Ultimately, it comes down to how well you know your client and the ecosystem around them. In Asia, that’s even more essential because regulations and enforcement are vague. You can’t rely only on analysis and diligence; you need to deeply know the client.
IFR Asia: Sajal, in infrastructure, are there countries or sectors where it’s challenging to do private credit?
Sajal Kishore, Fitch: Traditional infrastructure like transportation is increasingly moving to capital markets as governments step back, and we see privatisations, especially in India. These assets have accessed markets successfully.
Globally, we’ve seen a trend for energy transition and digitalisation. They are converging. These assets appeal to all kinds of investors. So, we see opportunities in renewables and data centres.
But in Asia, markets and regulatory frameworks are fragmented; contracts differ and legal enforcement is challenging. Many deals are also cross-border, so you have currency issues to deal with as well.
As a result, we tend to see pockets of activity in larger markets. Even in Australia – which Abhishek mentioned – renewables attract a lot of activity, but there’s a higher level of market risk in that particular geography. India has different types of risks again.
Different markets are at different stages of evolution, but renewables, digital infrastructure and energy transition create both opportunities and challenges in developed Asia and India.
IFR Asia: Celia, is there an evolution in what can underlie a transaction? Does it still need to be backed by a hard asset?
Celia Yan, Apollo: Asia has evolved a lot. Fifteen or 20 years ago, deals relied heavily on hard assets, which is why sectors were concentrated in real estate. When real estate had a bubble, half the managers were impacted. I pivoted early into asset-light and new-economy sectors, even in China.
Today, especially in sponsor-side direct lending, many deals aren’t in traditional hard-asset sectors. Many are cashflow-backed. We even see IP-backed or royalty-based deals. When underwriting non-hard-asset-backed deals – which I’ve done for some time – the mentality is similar. Hard assets don’t always help if enforcement is complex, with many creditors and layers.
Asset-light companies often have simple capital structures with a single debt and fewer creditors.
So structuring discipline is key: knowing where the pain points are, implementing the right level of governance, covenants, and value creation. You need early warning signs and the ability – via board seats or observers – to steer the company back on track. Asia is evolving toward where the US has been for some time.
IFR Asia: Abhishek, are you seeing any innovative transactions?
Abhishek Tiwaari, Nomura: We’ve all heard about CoreWeave.’s US$7.5bn debt financing facility. There’s a “mini-CoreWeave” in this region – a GPU-backed financing we did that was challenging but interesting.
Cashflow-backed financing has been around for 10–15 years in various forms. What’s changed in the last three to five years is that the sources of cash flow are more diversified.
It no longer has to be a service-based business that generates cashflows. You can do NAV financing against pools of loans or pools of equity stakes, mortgage-lending products, and more. Cash flows in any form – single assets or pools of assets – now support lending solutions.
IFR Asia: Firms are raising big private credit funds targeting Asia. If everyone is targeting Asia and has lots of capital to deploy, is that going to create challenges?
Indranil Ghosh, Cerberus: You’re right. Asia is still a small market but everyone is looking at how to deploy capital here. The good news is Asia’s economies collectively are growing faster than the rest of the world, and growth needs capital. That’s where we have a unique advantage.
The key is choosing the geographies and strategies that make sense for your firm and focusing on them. Spreading yourself thin or hiring lots of people to cover every market is challenging.
Successful firms are targeted – they know what they want to do, who they want to do it with, and they hire the right local talent. Local presence plus global capital works.
In India, we’ve seen a lot of local capital being raised, but these firms still can’t provide large solutions. That’s where global players bring bigger solutions and the ability to underwrite more complex transactions.
I think the market is big enough for all of us to keep deploying.
IFR Asia: SJ, are you seeing a lot of money chasing the same targets?
SJ Lim, KKR: Life would be boring without competition. But you have to find your points of differentiation – sourcing, underwriting, thematic views – and that’s how you create opportunities and win.
It’s a young, small market that should be larger, and competition will make it stronger. We all want to bring capital to the region, help it grow, and help good companies access capital in different forms. That will add to Asia’s success story.
Day to day, if we can be the only provider on a term sheet, that’s great, but long term, that’s not healthy.
IFR Asia: Is this influx of funds distorting the market? Is it compressing prices?
Celia Yan, Apollo: I hold a slightly different view from SJ. There is competition, but we don’t actually run into each other much yet – it’s just the stage of market development. Our strategies differ, for instance. We focus on generating protective yield, not just higher coupons.
There has been price compression in developed Asia. But in emerging Asia, it’s more about creativity in providing solutions than price competition.
In Australia, we also have insurance capital, giving us strong alignment with investors and clients. We can also provide long-term capital. I think that’s also important for the region’s growth.
We’re not chasing higher yield, nor engaging in pricing competition. For us, it’s about applying global underwriting discipline and generating protective yield with strong downside protection.
IFR Asia: Abhishek, are you still able to find untouched areas?
Abhishek Tiwaari, Nomura: No. Not really. You’re part of an ecosystem with different players and bringing different strengths. We welcome that – we don’t see it as competition, whether that’s in terms of private credit or banks.
On the banking side, success requires a diversified set of products and strong local teams. Combining diversified product offerings – senior secured, real estate, buyout financing, and everything in between – with local presence creates a critical advantage.
Pricing compression happens; we may get outbid – that’s life. But it’s important to be a partner in the ecosystem.
For example, KKR might be working on a transaction we’re also looking at, but separately we may be providing the client with a back-leverage solution. Product diversity is a big differentiator.
IFR Asia: Are we seeing any warning signs in private credit in the region?
Sajal Kishore, Fitch: Asia is small, so I’ll touch on global risks. The primary risk is liquidity – these assets are opaque and bespoke, and in stress, that affects marketability and recovery value.
Another risk is increased retail participation. So, in times of stress, transmission effects could be higher.
Finally, systemic risk. Private credit sponsors, banks and insurance firms are increasingly partnering, so interconnectedness is rising. In stress, that could create systemic risk.
In some pockets in some markets, we see bubble-like attributes: rapid growth, innovation, margin compression, competition. But I don’t see systemic risk right now.
Mitigants include: direct lending, the biggest chunk, does not show problematic attributes; private credit remains a small share of the overall financial system; and funds backing private credit assets have committed capital, low redemption risk, and low fund-level leverage.
Interconnectedness raises transmission risk, but in Asia, there’s nothing to worry about for now.
IFR Asia: Abhishek, globally we’ve seen some high-profile defaults with a private credit angle, but it seems credit-specific, not a private credit problem.
Abhishek Tiwaari, Nomura: I agree with Sajal. In Asia, private credit is a very small part of the broader lending landscape, so I don’t see danger signs specific to the region.
But we are in an environment shaped by geopolitics, tariffs, supply-chain issues, dislocations and technology-related risks. These weren’t as pronounced 5–10 years ago.
Each of these can impact business models, so we have to watch them. These are broader risks rather than private-credit-specific warnings.
Celia Yan, Apollo: They’ve covered the market perspective well. For me, it’s talent. We cover many markets, and in each, only a handful of people have been through cycles and have recovery and enforcement experience. With more global and local funds setting up, do we have the right talent with the right mindset and skillset to underwrite? It’s a complicated region – even developed markets in Asia are more complex than the US. The warning sign for me is whether the active players have the right talent running deals. That’s something I think about every day.
IFR Asia: We talked earlier about how the Asia market lacks depth. In the US, when a credit starts to deteriorate, there are funds that will pick it up, but in Asia that may not happen because there aren’t as many players at different levels. Is that a risk?
Abhishek Tiwaari, Nomura: Yes, but ultimately there’s a reason there aren’t many distressed players. In many jurisdictions, it’s very hard to take a claim and make it work. Either the legal process takes too long, or you’re buying it at such a cheap price that it doesn’t justify existing as a strategy – you’re buying for pennies on the dollar.
We are seeing a number of funds that traditionally focus on stress and distress starting to provide capital in Asia. But they tend to come in earlier; it’s not like the US where they step in after a bankruptcy event. It’s different. The pool of capital is improving, but in many ways still doesn’t exist because of the structural challenges in this market.
IFR Asia: SJ, any signs of a bubble?
SJ Lim, KKR: I think the positives are clear. Across Asia, we can all agree there will be more uncertainty, but the Asia story remains intact. Yes, we have big forces at play in terms of deglobalisation and nationalism, but there are many structural reasons why Asia will continue to grow.
It’s also not a heavily levered region. That’s partly cultural and partly due to the Asian financial crisis and other historical factors. Leverage isn’t at peak levels compared to the Western hemisphere.
Banking systems are well supplied with liquidity, and in most countries they are mature. That provides a cushion and protection.
The business of credit is simple: you say no 95% of the time, and for the 5% you say yes to, sticking to downside protection – understanding where you get your capital back, the structure you need – is critical.
I’m fundamentally a bull. I think it’s a good moment in time, and over the next five to seven years, the asset class will evolve and grow. It’s an exciting space to be in.