SINGAPORE Law and Practice Contributed by: Doos Choi, Pierre Dzakpasu, Janelene Chen and Pieter de Ridder, Mayer Brown
1. Private Credit Overview 1.1 Private Credit Market
weakened local currency, making offshore for - eign-currency borrowings unattractive. Bank loans remain the dominant/preferred option for many issuers. Pricing/perceived relative value is an additional impediment. 1.5 Junior and Hybrid Capital It is not particularly easy to dissect the private credit market in Asia by reference to categories that are more established in other parts of the world (eg, direct or distressed lending). Perhaps the best way to describe the majority of private credit demand in the region is “opportunistic”. This reflects the bespoke nature of each invest - ment case, which is rarely “cookie cutter” in the same way as, for example, direct lending strate - gies elsewhere in the world. Junior and hybrid products certainly form part of the regional private credit universe, which can also include preferred equity. 1.6 Sponsored/Non-Sponsored Debt There are a number of private credit fund man - agers who will gravitate towards this segment but, given the competition which they can face (from the bank loan markets, in particular), it is not the primary focus for many funds. 1.7 Recurring Revenue Deals and Late- Stage Lending Private credit providers are not active in recur -
As is the case for many businesses, Singapore is a destination for private credit providers pri - marily as a hub for South-East Asia. That is not to say that there are no opportunities within Sin - gapore itself. Indeed, direct-lending strategies have emerged on some event-driven financings but, given the recent downturn in M&A activity in the region, private credit investment into Singa - pore has cooled over the past 12 months. One of the main areas of opportunity within Singapore itself has been the fintech sector. 1.2 Interaction With Public Markets Asia’s public debt markets are very focused on large corporates and global or established regional financial sponsors and, unlike in other parts of the world, loans (and not bonds) repre - sent most of the debt market. When these mar - kets are open for business, they will be more competitive than private credit. While public debt markets in Asia showed signs of recovery towards the end of 2024, they have not come back in a way that would result in such refinanc - ings becoming commonplace. 1.3 Acquisition Finance Bank lending remains the dominant and – for many sponsors – the preferred form of acquisi - tion financing in Hong Kong, Singapore and the broader Asia market. The space for private credit is mainly in subordinated tranches within capital structures. 1.4 Challenges Singapore’s status as a gateway to South-East Asia continues unchallenged, but the major regional economies such as Indonesia, Malay - sia, Thailand and Vietnam have been suffering under the weight of high USD interest rates and
ring revenue financings in Singapore. 1.8 Deal Sizes, Fund Sizes and Fundraising
It is difficult to speak of typical size limits for private credit transactions in Hong Kong, Sin - gapore and other parts of Asia. Most of the vol -
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