Varde Partners, the $14 billion Minnesota-based credit investor, thinks about $500 billion borrowed by Indian companies is either already in trouble or facing financial distress.

India has a “very big” problem with loans made to companies that are behind on interest payments, Varde co-chief investment officer Ilfryn Carstairs said during the Milken Institute Global Conference in Los Angeles today. That has created an opening for the firm to purchase troubled liabilities as hedge funds and other investors seek high-yielding debt in foreign markets.

“You got last year a very big sudden shock in the Indian shadow banking market, which is about a $300 billion opportunity in stressed and distressed assets, and we think [this] will lead to even more opportunities in cyclical asset classes like real estate,” Carstairs said.

Carstairs’ comments came during a panel on global credit markets chaired by the conference’s namesake founder, Michael Milken. The conference, which traces its roots to the “Predators’ Ball” Milken hosted for troubled companies and junk bond managers, this year is focusing on the theme of “driving shared prosperity.”

More than $180 billion of loans to Indian corporations such as the conglomerate Lanco and metal manufacturer Bhushan Steel, now known as Tata Steel, are in default and counted as non-performing, according to Varde estimates presented during the panel.

Another $200 billion in bad debt comes from non-banking financial companies such as the Indian home lender DHFL and infrastructure debt provider IL&FS, according to Varde. More than $100 billion in real estate debt could also soon become stressed, the presentation slide said.

India and Asia are a growing focus for Varde, Carstairs said. The firm raised $400 million in December for a fund investing in Asian corporate debt, loans and real estate, its first in the strategy.

In August, Varde said it would partner with the Indian lender Aditya Birla Capital Limited to invest in stressed and distressed debt in the country. It also opened an office in Mumbai last year.

Last month Varde joined the private equity firm General Atlantic to purchase a 13% stake in the mortgage lender PNB Housing Finance worth about $270 million.

Varde sees $500 billion opportunity in Indian credit on Absolute Return.