Key Takeaways
- • Bain Capital Credit projects Asia-Pacific private credit AUM will grow nearly 190% over the next decade, from about $69 billion to approximately $200 billion, while estimating capital supply will remain roughly $100 billion short of demand.
- • Banks account for an estimated 88% of Asia's credit markets as of September 2025, versus 33% in North America and 51% in Europe, according to BIS data and Bain Capital Credit estimates.
- • Bain Capital Credit argues that 2025 bankruptcies at First Brands and Tricolor, and redemptions from semi-liquid retail vehicles, do not reflect broader weakness in direct lending or Asian private credit.
- • Fewer than 10 lenders have dedicated capital, local expertise and a meaningful multi-jurisdiction footprint in Asia, versus more than 2,000 private credit providers in North America, which the firm says supports better deal terms.
- • Asia-Pacific holds about 4% of global private credit AUM, compared with roughly 30% of global private equity AUM, despite representing an estimated 32% of global GDP in 2025.
Summary
Bain Capital Credit says Asia is emerging as the next growth frontier for private credit, distinct from the US market that has drawn scrutiny after high-profile 2025 bankruptcies involving auto parts supplier First Brands and auto finance company Tricolor. The firm notes those loans originated outside the core direct lending market and argues that the structural characteristics of Asian private credit largely insulate the region from the issues facing parts of the US market. Concerns over software-heavy private debt funds amid advances in artificial intelligence have also prompted questions about the asset class.
The central argument rests on Asia's bank-centric financial system. According to Bain Capital Credit, banks are retrenching from lending and focusing on larger companies and conglomerates, leaving many mid-sized companies short of financing. The shortage is compounded by the limited availability of high-yield bond markets and syndicated lending platforms. The firm projects Asia-Pacific private credit AUM will grow from about $69 billion to approximately $200 billion over the next decade, yet still expects capital supply to fall roughly $100 billion short of demand. Asia-Pacific accounted for an estimated 32% of global GDP in 2025 and is projected to reach roughly 35% by 2036, while the region represents only about 4% of global private credit AUM.
Bain Capital Credit also highlights weakness in Asia's public high-yield market. According to the firm, 78% of Asia-Pacific high-yield borrowers are concentrated in 10 sectors, dominated by real estate and financial and sovereign-related issuers. US dollar-denominated Asian high-yield bonds outstanding fell 57%, from roughly $220 billion in mid-2021 to $94 billion by March 2025, largely due to an 85% collapse in Chinese property-sector issuance. Infrastructure is another driver, with Asia-Pacific expected to account for 56% of global infrastructure investment through 2040.
On risk, the firm argues that redemption pressure from semi-liquid retail vehicles, which it says make up about one-fifth of the US direct lending market, does not signal broader weakness. Sell-side data through early 2026 show non-accrual rates at non-traded business development companies below 1%, and direct lending loss rates remain well below those in the broadly syndicated loan market. Bain Capital Credit also says fewer than 10 lenders have the scale to operate across Asia's fragmented markets, which it argues produces more tightly negotiated structures, lower average leverage than comparable US deals and lender protections such as personal guarantees. Asian private credit fundraising, however, fell to its lowest level in eight years. The firm concludes that Asia "warrants a larger allocation in global private credit portfolios."
The central argument rests on Asia's bank-centric financial system. According to Bain Capital Credit, banks are retrenching from lending and focusing on larger companies and conglomerates, leaving many mid-sized companies short of financing. The shortage is compounded by the limited availability of high-yield bond markets and syndicated lending platforms. The firm projects Asia-Pacific private credit AUM will grow from about $69 billion to approximately $200 billion over the next decade, yet still expects capital supply to fall roughly $100 billion short of demand. Asia-Pacific accounted for an estimated 32% of global GDP in 2025 and is projected to reach roughly 35% by 2036, while the region represents only about 4% of global private credit AUM.
Bain Capital Credit also highlights weakness in Asia's public high-yield market. According to the firm, 78% of Asia-Pacific high-yield borrowers are concentrated in 10 sectors, dominated by real estate and financial and sovereign-related issuers. US dollar-denominated Asian high-yield bonds outstanding fell 57%, from roughly $220 billion in mid-2021 to $94 billion by March 2025, largely due to an 85% collapse in Chinese property-sector issuance. Infrastructure is another driver, with Asia-Pacific expected to account for 56% of global infrastructure investment through 2040.
On risk, the firm argues that redemption pressure from semi-liquid retail vehicles, which it says make up about one-fifth of the US direct lending market, does not signal broader weakness. Sell-side data through early 2026 show non-accrual rates at non-traded business development companies below 1%, and direct lending loss rates remain well below those in the broadly syndicated loan market. Bain Capital Credit also says fewer than 10 lenders have the scale to operate across Asia's fragmented markets, which it argues produces more tightly negotiated structures, lower average leverage than comparable US deals and lender protections such as personal guarantees. Asian private credit fundraising, however, fell to its lowest level in eight years. The firm concludes that Asia "warrants a larger allocation in global private credit portfolios."
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