China is viewed as the most attractive distressed debt opportunities in Asia Pacific, as global investors sharpen their focus on the region after global uncertainties rose post the U.S. presidential election.
Around 52% of those surveyed say that China offers the best investment opportunities in the next 12 months, followed by Japan and India, each with 35% and 7% of investors’ vote, according to a new report produced by Debtwire in partnership with PwC Singapore and global law firm Reed Smith.
About 88% of respondents plan to allocate more or the same amount of capital to Asia Pacific distressed debt opportunities, while planning to do the same for special situations in the region.
"Volatility and uncertainty remain the watchwords of the year to come, both in economic and geopolitical terms, and it is up to the shrewd investor to know when to strike while the iron is hot," says Luc Mongeon, managing editor of Debtwire Asia-Pacific.
Financial services, oil and gas, and energy are some of the largest topics in distressed debt at the moment, while 60% of respondents chose financial services as one of three sectors they look to target in the next 12 months.
"Most respondents felt that at least one in four distressed debt or special situation opportunities explored in the region were attractive. This reflects the extent and quality of opportunities in the region," says Peter Greaves, restructuring leader, PwC Singapore.
The issue of unfavorable bankruptcy laws is ranked as the greatest impediment to restructuring efforts, nominated by 35% of respondents, followed by the lender’s own capital issues (33%) and debtor delay due to legal and regulatory permissions.
In the next 12 months, 90% and 82% of respondents are expecting to see an increase in volume in primary markets for high yield bonds and private placements, respectively.