#Investments — 14.07.2019

Private Deal Space in Asia: Q&A with Vincent Moge, MD, Global Markets, BNP Paribas


Could you comment on BNP Paribas’ position in the private debt market?

BNP Paribas has been active for a few years in Asia-Pac, essentially originating transactions from our corporate network and structuring and distributing transactions to investors.

This is a pretty vibrant market in Asia where you need to rely on the quality of your origination capabilities. We've been working successfully with investors on that basis.

Where are we in the current cycle and why would it be an attractive moment to be looking at this asset class?

Obviously, there are cycles, especially in some sectors, and there are sectors that are more active than others. Real estate, for instance, comes to mind in Asia.

Private debt being typically a more lucrative proposition for investors but also a more expensive form of financing for a borrower.

People tend to source financing as cheaply as they can. Currently, the cycle is obviously quite constructive in that sector.

There are other sectors like the energy sector, power et cetera where it's linked to commodity prices and where this cycle can actually be challenging, and opportunities can arise but also present risks.

How would you qualify the existing and upcoming deal flow in Asia?

I think it's relatively healthy. You have a backdrop of strong economic growth across the region especially compared to the rest of the world.

You also have very low yield environment where investors are searching for yield. So, the same way as a borrower has the opportunity to create a lot of equity value for himself, he might be looking for leverage and potentially issuing private debt, which in turn becomes an active proposition from an investor's perspective.

How active are Asian family Offices in the private debt space at the moment? Which trends do you see? 

The traditional players in the private debt space in Asia are typically more hedge funds, special situations funds, credit arm of private equity, some sovereign funds.

And wealth management is essentially represented through a relatively limited number of players. Interestingly, they are often the users themselves and the borrowers looking to finance their projects.

But we do see a trend towards a professionalisation and the capacity to analyse transactions that we opportunistically show to them.