China's burgeoning private debt market offers significant potential for foreign private credit sponsors. Even before the distress created by COVID‑19, many Chinese companies were in acute need of debt financing. Encouraged by a slew of opening‑up policies favorable to foreign debt funds put forward by China, an increasing number of private credit sponsors are setting their sights on the Chinese debt market.
In our publication Investing in China's Debt Market: Opportunities for Foreign Investors, we explored some of the difficulties offshore private credit sponsors may experience in structuring their debt investments in PRC corporates through offshore funds, including the potential difficulties of taking effective security.
For many offshore debt sponsors, the solution to overcoming these hurdles is to use an onshore structure. In this update, we take a closer look at these onshore structuring options, their key features, and why some structures may be more suitable to sponsors structuring private credit investments in a particular way.
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Authored by Jonathan Leitch, Andrew McGinty, James Wood, Shantay Cong, Weiying Zhang, and Nigel Sharman.
