Sovereign Wealth Funds Join Clamor for Private Credit in EMs

Partner and co-chair of Herrick's Corporate Department, Morris DeFeo, was quoted in Bloomberg in an article discussing the wave of private credit deals across emerging markets and how institutional and sovereign wealth investors are seeking to diversify their US-focused portfolios. 

According to the article, "for emerging markets, this trend should offer greater access to global capital, though costs can be higher than public markets. For investors, their concentration of bets in the US has also come into question following some high-profile bankruptcies." 

The article acknowledges a "stampede risk" noting that "emerging markets can still be more risky than developed markets, with differing legal frameworks. Investors can be penalized if they don’t do the necessary due diligence."

“You have a lot of excitement and there’s a market dynamic where everybody’s afraid of missing out. People have a tendency of stampeding into the market too quickly and in emerging markets, that’s very dangerous,” said Morris.

"One problem is that the distinction between the private and public sector is sometimes blurred in emerging nations, he said. Often government officials or ruling families could control a company with a degree of sovereign protection, making it hard to enforce a judgment against them."

Read the full article in Bloomberg here. Access may require a subscription.