Vietnam offers opportunites in distressed debt in 2017
Vietnam has been rated as a country offering significant opportunities in distressed debt and special situations over the next 12 months, according to 93 per cent of respondents polled by Debtwire.
In association with PwC Singapore and global law firm Reed Smith, Debtwire has released the Asia-Pacific Distressed Debt & Special Situations Market Update, with content based on the opinions of 60 private equity investors, prop desk traders, hedge fund managers, credit risk or workout managers, and emerging market investors in the Asia-Pacific region.
The report shows that in the next 12 months, 88 per cent of respondents plan to allocate more or the same amount of capital to Asia-Pacific distressed debt opportunities, while all respondents plan to do likewise for special situations in the region.
“The disparity for certain jurisdictions between locations where opportunities are expected vs. where capital is being targeted is interesting, as it suggests that despite deemed opportunities investors are still focused on the more mature markets and remain cautious over markets with less tried and tested end-game options, such as Indonesia and Vietnam,” said Mr. Peter Greaves, Partner at PwC Singapore.
Each country was rated based on its expected distressed debt/special opportunities in the next 12 months using the following: significant opportunities, some opportunities, few opportunities, no opportunities. China is rated by the most respondents (97 per cent) as a country offering significant opportunities in distressed debt and special situations, followed by South Korea and Vietnam, both at 93 per cent.
Twenty-seven per cent of respondents indicate Vietnam is a country in which they have made distressed debt/special situations investments in the last two years.
Seventy per cent of respondents expect banks to sell their loan holdings in Vietnam, while the vast majority of respondents (85 per cent) expect banks to sell their loan holdings in China and India.
The proportions above loosely reflect the relative size of the markets (with some notable exceptions such as Vietnam), suggesting that respondents expect banks to seek to reduce their exposures generally across the region and in certain sectors. “The challenge will be in certain territories such as Vietnam and Indonesia where previous responses suggest that we should expect lower levels of appetite and so this may present challenges to achieving the above disposal strategies,” said Mr. Greaves. “There is already recent market evidence of failed portfolio sales in certain jurisdictions in the region.”
Vietnam is seen to be in good shape, with only 4 per cent of respondents perceiving it as a difficult jurisdiction seeing rapid improvement and 48 per cent seeing slow improvements on the horizon in the next 12 months, though 36 per cent expect its situation to remain the same, and 12 per cent think the situation will deteriorate slowly.
VN Economic Times