2012-04-17-KPMG_China-2012亚太区不良债务及特殊资产投资机遇展望_33页_3mb

Asia-Pacific Distressed Debt & Special Opportunities Outlook 2012 Summary

Core Content Overview

The Asia-Pacific Distressed Debt & Special Opportunities Outlook 2012 report presents the views of 100 professionals in the distressed debt investment space on the market conditions and opportunities expected in 2012. The report outlines a cautious and mixed outlook, with respondents highlighting the impact of the eurozone crisis, regulatory changes, and economic shifts in the region.

Main Viewpoints

• Liquidity and Funding Costs:

  • Despite no severe funding squeeze expected, liquidity will be tighter and funding costs will rise due to the withdrawal of European banks from the region.
  • 60% of respondents expect primary mezzanine loan volumes to increase in 2012, while 35% expect no change and 5% a decrease.
  • 56% expect CB (corporate bond) issuance volumes to rise, 35% to remain unchanged, and 9% to decrease.
  • The outlook for private placements is mixed, with 41% expecting an increase, 38% no change, and 20% a decrease.
  • 43% of respondents expect high yield bond issuance to increase, 42% to remain the same, and 15% to decrease.

• Distressed Debt Levels:

  • 55% of respondents expect distressed debt levels in the Asia-Pacific region to increase from 2011.
  • 26% expect levels to remain the same, and 19% to decrease.
  • The eurozone crisis is seen as the primary driver of increased distressed debt, with 46% of respondents citing it as the main cause.
  • Other factors include slowing Asian economies (39%), China's economic bubble implosion (38%), and US recession (36%).

• Investment Allocations:

  • 40% of respondents expect to increase capital allocation for distressed debt.
  • 43% will maintain current allocations, and 17% will decrease.
  • This reflects a more optimistic stance compared to 2011, where only 32% increased their capital.

• Market Volatility:

  • 34% expect greater volatility in 2012, 41% expect it to be about the same, and 25% expect a decline.
  • Volatility is seen as a potential factor in liquidity and distress levels.

Key Investment Opportunities

• Private Equity Investments:

  • 62% of respondents identify private equity investments as the most attractive opportunity for distressed debt and special situations investors.
  • This is due to the maturing of private equity portfolios and the search for alternative exits by general partners.

• Secondary Market Trading:

  • 48% of respondents highlight secondary market trading as a key opportunity, with high yield debt and structured bonds being traded at attractive prices.

• Convertible/Exchangeable Bonds:

  • 40% of respondents see convertible/exchangeable bonds as a potential opportunity.

• Corporate Asset Sales and Debt-to-Equity Conversions:

  • These are also seen as popular options for distressed investors.

• M&A Activity:

  • 30% of respondents expect M&A activity to be a significant source of opportunities.

Target Geographies

• China is the most favored target for distressed debt and special situations investments, with 74% of respondents ranking it as a top-seven geography.
• Japan ranks second, with 67% of respondents listing it as a top-seven target.
• Australia is third, with 58% of respondents selecting it.
• Indonesia has fallen out of the top seven, likely due to improving fundamentals, ample local liquidity, and fewer high yield bond issues since the 2008 crisis.
• India, South Korea, Philippines, and Malaysia are also expected to see increased attention from investors.

Target Sectors

• Financial Services remains a top target, with 44% of respondents focusing on it in 2011 and 43% in 2012.
• Real Estate is the second most targeted sector, with 33% of respondents targeting it in 2011 and 43% in 2012.
• Manufacturing is the third most targeted sector, with 34% of respondents targeting it in 2011 and 34% in 2012.
• Other sectors expected to see increased activity include Consumer Products, Retail, Industrials, and Chemicals.

Bank Loan Sales and Disposals

• 70% of respondents expect Japanese banks to be the primary sellers of loan holdings.
• Australia and New Zealand follow with 62% of respondents.
• Thailand, Korea, and India are also expected to see significant loan sales.
• The Moratorium Act in Japan may delay loan sales for another year, but a renewed focus on bad loan disposals is anticipated once it expires.

Conclusion

The report underscores a mixed outlook for the Asia-Pacific distressed debt and special opportunities market in 2012. While liquidity is expected to tighten, distressed debt levels may rise due to the eurozone crisis and regulatory pressures. China remains the top target, followed by Japan and Australia, with private equity and secondary market trading being the most attractive investment avenues. The market remains volatile, and while some investors are optimistic, others remain cautious about the long-term implications of global economic uncertainty.