Key Takeaways
- • Private credit has grown from USD40 billion in assets under management in 2000 to a USD1.7 trillion market, according to HSBC citing its own references.
- • Forecasts project private credit could more than double to USD4.5 trillion by 2030, though it would remain much smaller than the USD140.7 trillion global fixed income market in 2023.
- • Asia accounts for only around 6% of global private credit AUM, which HSBC presents as evidence of substantial growth potential in the region.
- • HSBC is injecting USD4 billion into its private credit funds to help attract capital and build a USD50 billion credit fund over the next five years.
- • Corporates are staying private longer, with median time before an IPO rising from 6.9 years in 2014 to 10.7 years in 2024, supporting demand for private capital.
Summary
HSBC Corporate and Institutional Banking, in an insights piece on private credit, describes the asset class as a fast-growing source of corporate funding that complements public credit markets. According to the article, private credit grew from a marginal part of the financial system in 2000, when assets under management were just USD40 billion, to a USD1.7 trillion market. Over that period it has evolved from sponsor-driven lending into a diversified asset class spanning direct lending, asset-backed financing, fund financing and specialty finance.
The article attributes the sector's growth to several structural factors. Initial acceleration followed the 2008 financial crisis, when tighter bank regulation pushed lenders toward more liquid, rated products and created room for alternative managers. More recently, the normalisation of interest rates and abundant global capital seeking returns have further accelerated uptake. HSBC also notes that companies are taking longer to go public, with median time private rising from 6.9 years in 2014 to 10.7 years in 2024, making private credit an attractive funding source. Demand is expected to be strong from digital infrastructure such as data centres and renewable energy projects such as wind and solar.
HSBC highlights Asia's potential, noting the region accounts for roughly 6% of global private credit AUM. Banks remain a major source of capital in the region, which has also constrained the development of its high-yield bond market, though the article sees rapid progress toward more diversified financing channels. Demand in direct lending includes hybrid debt-equity solutions such as dividend recapitalisations, and growth companies value the speed and flexibility of private lending when banks pull back. Real estate is a key theme, with distressed and performing property credit demand across Hong Kong, India and Japan. The article cites indicative returns of 18% to 20% for opportunistic or distressed property loans and 8% to 15% for lower-risk instruments such as construction financing and senior mezzanine debt.
Looking ahead, HSBC expects Asian private credit to deepen as more institutional capital is raised and allocated to loans, creating secondary liquidity that allows traditional lenders to recycle balance sheet assets. The bank says it can support clients across origination, structuring, underwriting, syndication and trading. It is injecting USD4 billion into its private credit funds, which it expects to help attract further investor capital toward a USD50 billion credit fund over five years. Mr Oliver Kadhim, Head of Institutional Client Group, Asia at HSBC, said the bank's support would benefit institutional investors seeking to diversify into the asset class.
The article attributes the sector's growth to several structural factors. Initial acceleration followed the 2008 financial crisis, when tighter bank regulation pushed lenders toward more liquid, rated products and created room for alternative managers. More recently, the normalisation of interest rates and abundant global capital seeking returns have further accelerated uptake. HSBC also notes that companies are taking longer to go public, with median time private rising from 6.9 years in 2014 to 10.7 years in 2024, making private credit an attractive funding source. Demand is expected to be strong from digital infrastructure such as data centres and renewable energy projects such as wind and solar.
HSBC highlights Asia's potential, noting the region accounts for roughly 6% of global private credit AUM. Banks remain a major source of capital in the region, which has also constrained the development of its high-yield bond market, though the article sees rapid progress toward more diversified financing channels. Demand in direct lending includes hybrid debt-equity solutions such as dividend recapitalisations, and growth companies value the speed and flexibility of private lending when banks pull back. Real estate is a key theme, with distressed and performing property credit demand across Hong Kong, India and Japan. The article cites indicative returns of 18% to 20% for opportunistic or distressed property loans and 8% to 15% for lower-risk instruments such as construction financing and senior mezzanine debt.
Looking ahead, HSBC expects Asian private credit to deepen as more institutional capital is raised and allocated to loans, creating secondary liquidity that allows traditional lenders to recycle balance sheet assets. The bank says it can support clients across origination, structuring, underwriting, syndication and trading. It is injecting USD4 billion into its private credit funds, which it expects to help attract further investor capital toward a USD50 billion credit fund over five years. Mr Oliver Kadhim, Head of Institutional Client Group, Asia at HSBC, said the bank's support would benefit institutional investors seeking to diversify into the asset class.
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