Report «A Global NPL Perspective» by Ashurst
With established NPL markets in Italy, Spain and Greece still at the forefront of investor’s attention for investment, there is increased appetite to seek out new markets. The report, «A Global NPL Perspective«, compiles the views of senior executives across the NPL industry about where the future pipeline will come from and where the investment priorities of buy-side clients currently lie.
- 96% of global financial institutions surveyed are likely to bring a portfolio to market in the next 12 months.
- 55% of investors are likely to invest in China in the next two years as Asia is set to outpace LatAm.
- Opportunities in existing active European markets remain focused on Southern Europe with over 50% of investors likely to invest in NPLs in Italy in the next two years.
- 61% of respondents believe the EC’s credit purchaser and servicer directive will have a positive impact on the market.
Ashurst highlights that with levels of undeployed investment capital in the market generally remaining high and European interest rates remaining at sustained lows, it is unsurprising that investors continue to seek new opportunities in non-performing asset classes and geographies.
In Europe, 43% and 33% of investors have already invested in Italy and Spain and over 50% and 45% respectively are likely to invest in those two jurisdictions going forward, with a correlation for continued investment appetite in Portugal and Cyprus. Given that the Greek market remains at its formative stages, it’s notable that some 39% of investors report that they already invested in Greece. Appetite there remains high with almost half of investors stating that they are likely or more to invest there in the next two years.
With new markets in focus, China stands out as the target investment country for the next two years and out of the 56% investors who are at least likely to invest there, over a third state that they are certain to do so. The research also indicates that some 57% of investors have already invested in Chinese NPLs in the last two years – higher than expected.
As Asia seems set to outpace Latin America on volumes over the next two years, each of China, India, Thailand, Indonesia, Brazil, Argentina and the Middle East will each see a constant or increasing number of investors looking to invest in NPLs when compared to the last two years.
The research shows that globally 44% of financial institutions regard outright loan sales as their preferred strategy for NPL reduction, demonstrating the importance of the ‘clean break’ principle to sellers which prevailed in the early Westerns European NPL transactions.
Read the full report here.