Private credit markets in the Asia Pacific region have experienced rapid growth in the past decade, driven by niche demand and robust economic growth. Moody’s Ratings predicts that this trend will continue, with the private credit sector in Asia-Pacific expanding further, particularly in large economies such as India. Despite the growth, private credit markets in the region are still relatively small compared to global transactions, accounting for only 6-7% of total transactions over the past decade. The report highlights the strong demand for private credit in India, fueled by financing needs in sectors such as real estate, infrastructure, and manufacturing, as well as by companies in growth stages.
The current market size of private credit assets under management (AUM) for lending to Asia-Pacific companies is estimated at around USD 120 billion, double the figure from four years ago. Moody’s Ratings noted that while private credit markets in Asia-Pacific are small compared to global standards, they are expected to continue growing, driven by interest from investors in the region as well as global markets. In particular, long-term institutional investors with higher risk appetites are expected to continue investing in private credit in Asia-Pacific, helping to fill funding gaps for middle-market companies and finance projects such as infrastructure development and leveraged buyouts (LBOs).
Asia-Pacific investors are also increasingly interested in the global private credit market, with a focus on investments in the US and Europe. Large economies in the region, such as Australia, Japan, and Korea, have more sophisticated financial and legal systems, as well as larger investor pools. Meanwhile, in countries like China and India, demand for private credit is being driven by economic growth and improvements in regulatory and legal systems. Moody’s Ratings highlighted the importance of private credit in filling funding gaps for middle-market companies and supporting projects such as infrastructure development.
India’s private credit market is expected to grow steadily, supported by strong demand from various sectors and companies in growth stages. Moody’s Ratings emphasized that private credit will continue to be an attractive financing option for middle-market companies in need of funding, as well as for projects such as infrastructure development and leveraged buyouts. The report also pointed out that private credit in Asia-Pacific is primarily driven by long-term institutional investors with higher risk appetites, highlighting the potential for further growth in the sector. Overall, the outlook for private credit markets in the Asia Pacific region remains positive, with continued expansion expected in the coming years.
