Ninety One: The rise of EM private credit
Ninety One’s Simone Boes and Martijn Proos explain why emerging market private credit offers attractive yields, strong lender protections and growing opportunities across structural growth themes. ‘Unlike in more crowded developed markets, emerging markets remain a lender’s market.’
By our editorial team
How has the opportunity set in EM private credit evolved over the past decade?
Simone Boes: ‘While tighter regulatory capital requirements have constrained traditional bank lending, a combination of factors has driven up financing needs across emerging markets over the past decade. These include strong economic growth, improving legal and regulatory environments, rapid urbanisation, heavy investment in infrastructure, digitalisation, and the energy transition.
A growing mismatch between capital supply and demand has created a sizeable opportunity for specialist private lenders, giving rise to a market capable of supporting complex, long-term financing across rapidly developing economies. For investors, the result is an attractive and expanding opportunity set.
This shift helps explain how the market has evolved. Once dominated by development finance institutions and multilateral development banks – who provided long-term infrastructure debt alongside banks’ short-dated lending – the market increasingly offers commercial financing opportunities to return-seeking investors, through direct lending and hybrid blended-finance structures.’
What is driving up interest in EM private credit?
Martijn Proos: ‘EM private credit offers investors meaningful diversification and a yield premium without requiring investors to take on more risk: a trade-off that’s increasingly evident in parts of the developed market private credit universe. For senior secured direct lending especially, EM can offer similar or higher risk-adjusted returns, often underpinned by stronger, more conservative, and more enforceable financial covenants than those typically found in DM.
With awareness rising, institutional capital is broadening beyond DMs as investors search for stronger lender protections, attractive risk-adjusted returns, and greater portfolio diversification. EM private credit attracted a record $ 22.3 billion in deployment across FY2025 — nearly 40% above the previous high of $ 16 billion set in 20221. Increasingly, sophisticated investors we speak to view EM private credit as a strategic component of global private markets portfolios.’
Where do you see the most attractive opportunities?
Boes: ‘Multiple structural growth themes are offering up an abundance of investment opportunities across energy, electrification, telecommunications, digital assets, transport, the transition to net zero, and climate-resilient infrastructure. In addition, beneficiaries of AI are prevalent in the EM opportunity set: data centres and digital infrastructure platforms that exist to meet the energy and capacity demands that AI growth is driving.
Given the uncrowded nature of emerging markets, lenders can afford to be selective and avoid deals or jurisdictions where the risk-return balance is not favourable.
From a regional perspective, a plethora of opportunities can be found across Latin America. Recent opportunities towards which we have deployed capital include renewable energy development, sustainable aviation fuels, sustainable data-centre infrastructure, decarbonising agricultural cold storage, and extending small, socially responsible loans through a leading microfinance provider. But exciting investment opportunities can be found in many other jurisdictions across the globe, from Vietnam, Chile, and South Africa to Turkey.’
Does investors’ perception of risk align with reality?
Proos: ‘By our estimates, emerging markets offer a premium of 150-300 bps over comparable transactions in DM, yet we find that investors typically overestimate the associated risk. The key reason is that unlike in more crowded developed markets, where competition has shifted negotiating power towards borrowers, emerging markets remain a lender’s market. That means investors can negotiate strong collateral packages, comprehensive covenant protections and conservative capital structures while still earning attractive yields. Furthermore, given the uncrowded nature of emerging markets, lenders can afford to be selective and avoid deals or jurisdictions where the risk-return balance is not favourable.
EM private credit offers investors meaningful diversification and a yield premium without requiring investors to take on more risk.
Another source of misaligned perceptions relates to lack of awareness that EM borrowers typically operate with lower leverage, and loans are predominantly senior secured, and that transactions are frequently governed by English or US law, giving lenders stronger structural protections than are often available in DMs.
Furthermore, unlike many DM private credit portfolios, where lending has become concentrated in sponsor-backed software and services businesses, EM private credit continues to finance heavier asset infrastructure and other essential assets underpinning long-term economic growth. AI disruption risk is limited.’
How are geopolitical developments reshaping investment opportunities?
Proos: ‘Conflicts in the Middle East and Ukraine have reinforced the imperatives of energy security and supply-chain resilience, both of which demand physical investment. This adds impetus to a new expenditure (capex) supercycle, the drivers of which are multiple and reinforcing: the energy transition, AI and data-centre infrastructure, defence spending, re-shoring (repatriating formerly outsourced production), and the replacement of ageing infrastructure.
Energy market disruption in particular is accelerating the shift to electrification and clean technology, led by EMs. Clean technology is already the cheapest form of new energy generation in the vast majority of regions, and a growing focus on energy security, accelerated by geopolitical events, is driving further momentum and creating compelling infrastructure investment opportunities.’
What are the keys to successful investment outcomes?
Boes: ‘As investor demand increases, competition for experienced managers is also intensifying. However, EM private credit remains a specialist asset class requiring local knowledge, extensive structuring expertise and wide origination networks nurtured over many years. Robust monitoring processes are also vital.
Access remains one of the biggest differentiators. Long-standing relationships with international investment banks, regional financial institutions and development finance institutions bring distinct advantages and allow managers to review a significant number of opportunities and be highly selective in deal making.’
|
SUMMARY EM private credit is a maturing and growing asset class that is increasingly in focus as investors seek greater diversification. It taps into powerful structural themes and offers exposure to asset-heavy industries, with limited risk of AI disruption. Unlike in more crowded developed markets, lenders in EM are firmly in the driver’s seat, setting terms and conditions, selecting the strongest deals, and securing robust protections while still capturing a yield premium. |
- 2026 Industry Data & Analysis – GPCA.