Wealth bankers in Asia rush to calm growing private credit fears

Private bankers in Hong Kong and Singapore have been fielding urgent calls from their high net-worth clients, sources said. Read more at straitstimes.com.

Hong Kong – Private bankers across Asia are scrambling to contain client anxiety as redemption pressures ripple through the US$1.8 trillion (S$2.3 trillion) private credit market, even in a region seen as more insulated from the recent turmoil. 

It comes after a few high-profile blowups in the United States and Europe of companies that were financed by private lenders eroded investors’ confidence.

With investment funds’ gating mechanisms suddenly in focus, private bankers in Hong Kong and Singapore have been fielding urgent calls from their high net-worth clients seeking clarity or asking to redeem positions on the private credit products they hold, according to people familiar with the matter.

Regulators in Asia are also increasing scrutiny of the asset class, aiming to protect less-savvy individual investors, who tend to be more sensitive than their institutional peers and easily rattled by negative headlines.

“Many wealth investors had never experienced a redemption queue before this cycle,” said Mr Kher Sheng Lee, co-head of Asia Pacific at the Alternative Investment Management Association. The rapid adoption of private credit products by individuals outpaced their practical familiarity with how illiquid structures behave under stress, making it essential for fund managers, distributors and investors to bridge that knowledge gap, he said.

Concern about US private credit funds with exposure to the software sector – now under pressure from rapid advances in AI – have fuelled withdrawals at vehicles run by BlackRock, Blackstone and Blue Owl Capital. Morgan Stanley and Cliffwater LLC capped redemptions at their multibillion-dollar funds after clients sought to pull out far more than is allowed. JPMorgan Chase & Co. also restricted some lending to private credit funds after marking down the value of certain software-linked loans in its portfolios.