Private credit investors are seeking to reshuffle their portfolios as the escalating global tariff war prompts mounting fears over allocations into the U.S.
A growing number of portfolio managers are looking to geographically diversify their books amid rising uncertainty from the U.S., according to speakers at the SuperReturn Private Credit Asia conference in Hong Kong on May 7 and 8.
Even if global growth slows, certain parts of Asia or emerging markets could still expand at a strong continued pace, said Susan Lee, head of Asia hedge fund and private credit investment due diligence at Albourne Partners Asia at the conference on May 7.
“Maybe capital solutions-oriented private credit would be a great opportunity to tap into that growth with downside protection,” Lee said.
Private credit managers have been actively assessing the impact of U.S. President Donald Trump’s sweeping global tariffs on their investments. Many have acknowledged that significant new levies would hurt corporates and having a highly diversified portfolio is helpful.
Beyond geographical diversification, managers are also looking to strengthen deal structures by using assets as a form of collateral. RBC BlueBay Asset Management’s senior portfolio manager for emerging markets Illya Zyskind said he’s seeing a need for stronger covenants, stricter equity checks for corporates and more asset-backed type financing. All of these can protect investors amid a volatile environment, he added.
Many are still betting big on the Australian market because it remains largely insulated from the tariff turmoil, speakers said.
Alternative investment manager Wingate Group’s Nick Jacobson said on May 8 at the conference that he expects Australia’s private credit market to double in at least the next three years. This growth could come from the country’s corporate leveraged loans and real estate space, which offer private credit investors the best types of opportunities, said Phil Miall, head of private debt Australia for QIC.
