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Spotlight on Private Debt

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Private Debt has matured into an industry accepted asset class in less than a decade. It is a very complex and evolving product that needs experienced professionals at every stage of the value chain to drive it forward.

As capital continues to flow into distressed debt globally, we are witnessing private debt growth at an unprecedented rate. A trend that Preqin predicts will continue over the next five years to almost double its assets at a compound average growth rate (CAGR) of 11.4% (2020-2025).

The asset class has displayed resiliency and remained strong during the COVID-19 pandemic, “still offering very high yields from the high single digits into the teens”, says Treabhor Mac Eochaidh, Head of Debt Services at MUFG Investor Services.  

Private Debt 2021 by region

The United States will continue to be the dominant player in the Direct Lending space. It is predicted to lean into the asset class in 2021 as equity firms look for returns averaging in the high single digits. 

Lending criteria at Eurozone banks remain tight. This is leaving traditional European bank originated debt less attractive at the mezzanine level. Private Debt Investors continue to see opportunities in this space for 2021. Interestingly the Middle East and Africa are starting to pique interest in the small and mid-cap levels. A region to keep an eye on in the future.

Singapore and Hong Kong remain as jurisdiction hubs by credit managers looking at Private Debt, Distressed Debt and Nonperforming Loan (NPL) growth in China. Indian debt is still of huge interest in 2021 with a growing demand for inbound liquidity. Finally, Australian debt continues to be inward looking / domestic in nature as fossil fuels still dominate much of the mezzanine debt space.

Debt Services at MUFG Investor Services 

MUFG Investor Services Debt Services team has service locations available in the Americas, EMEA and APAC regions, with subject matter experts on hand in each service location.

Our loans ecosystem is designed to ensure the quality and accuracy of reflecting this complex asset class. Direct lending services are delivered via a leading industry recognized loan record keeping platform (Sentry), which is integrated with our proprietary systems for speed and accuracy.  

We have both the technology and talent to seamlessly interpret and absorb complex loan documentation data and track and substantiate all lifecycle events, leaving our Partners more time to focus on the Direct Lending market.

Taking a holistic approach, tracking every side of the deal (lenders, borrowers, and agents), we continue to expand and enhance our core offering, focused on developing increasingly robust solutions for our clients in this space. 

Please contact Treabhor Mac Eochaidh, Executive Director, Head of Debt Services, to find out more about our offering at [email protected].