Unable to access China's distressed assets directly, international private debt buyers have tied up with local partners and are building teams to identify opportunities.
The supply of Chinese non-performing loans is rising, but they are likely to fall short of investor expectations, argue some debt specialists.
Steer clear of mezzanine in Asia and China NPL funds, says Hamilton Lane. The private markets investor's ideal credit portfolio is a blend of special situations and direct lending.
Dragon Capital says Vietnam Asset Management Co could open up distressed bank debt opportunities in the country, but Fitch Ratings is less convinced.
The best way for China's banks to deal with a growing number of non-performing loans is to allow assets to be securitised and sold at distressed levels, argues political scientist Victor Shih.