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Laxman Pai, Opalesque Asia:

There are 457 private debt funds in the market as of April 2020, seeking a combined $201bn, says Preqin. These are the highest figures ever recorded.

"Given that the industry is sitting on $292bn in dry powder, we expect deals to pick up as market participants get comfortable with valuations," said a report by Preqin.

"The private debt industry as we know it today took off in the wake of the 2008-2009 financial crisis," it added.

A key question for investors is how the industry will fare amid its first major test: a global recession triggered by COVID-19.

As the 2020 Preqin Global Private Debt Report highlighted, the market in 2019 was characterized by intense competition and looser loan terms.

Investors will be watching to see how funds exposed to covenant-lite deals perform.

According to S&P Global Ratings, a surge in defaults is likely as a result of the pandemic.

The default rate on US nonfinancial corporates could rise above 10% within the next 12 months, up from 3.2% as of February 2020, the credit rating agency said.

A surge in defaults would create opportunities for distressed debt funds.

"In our April 2020 survey, more than a third (35%) of investors said they expect to target distressed debt opportunities in 2020 as a result of COVID-19. We expect fund managers specializing in this strategy to be on the hunt for fresh capital," it said.

US-based Oaktree Capital Management, a global alternative invest......................

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