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South-East Asian loan portfolio transactions

24 August 2016

Over the last two years, the on-going economic slowdown and dislocation in commodity prices have affected loan quality across South-East Asia.

South-East Asian loan portfolio transactions

This effect has been amplified by deliberate devaluation of some Asian currencies, resulting in a deterioration in the ability of companies to service debt. This is resulting in a rise in non-performing loans (NPLs) in the region. Banks may consider opportunities to reduce their exposures and de-risk, by reference to a specific named borrower, corporate group, industry sector, geography or a combination. 

These conditions and trends will provide potential purchasers with varied opportunities for investment in credit across the region and may open possibilities for entry into markets which would not otherwise have been open to them.  There are investors globally that see South-East Asia distress as an attractive sector and are seeking exposure to South-East Asia credit – making such portfolios an attractive entry to the market. 

There are a number of structuring techniques, the choice of which will depend largely on the commercial drivers of the seller and purchaser including, for example, whether the purchaser wants to establish a direct lending relationship or a pure economic exposure. These issues will be impacted by regulatory considerations in the jurisdictions across South-East Asia. Our South East Asia team takes a deeper dive into the issues and opportunities and looks at structures and execution techniques in their report on South-East Asian loan portfolio transactions.

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