Regulatory and compliance issues are the most significant
barriers to investment in private debt, according to 63% of respondents to a
Tradeteq survey of more than two-hundred finance professionals from the private
debt and trade finance arena. Meanwhile, 86% of trade finance professionals
believe that trade financing will expand from banks and alternative lenders
into embedded lending.
The full set of responses is
as follows:
1. What
factors do you think may currently prohibit investment in private debt assets?
a.
Regulatory and compliance – 63.2%
b.
Technological limitations – 20.6%
c.
Investment transparency – 10.3%
d. Other – 5.9%
2.
Do you believe trade financing will expand from banks and
alternative lenders to be integrated into business-to-business platforms such
as logistics and e-commerce?
a.
Yes – 86%
b.
No –
4%
c. Unsure – 10%
Both private debt and trade
finance assets have witnessed remarkable growth in recent years, as investors
shift to alternative assets to create a diversified, stable source of income
amid interest rate rises and ongoing volatility.
Total assets under management
allocated to private debt are expected to hit $2.3 trillion by the end of 2027,
increasing at a faster rate than alternatives overall. However, US$400bn of the
US$1.5tn current size of the private debt industry has still not been deployed.
*
Similarly, while trade finance
has seen global goods exports grow
by 26.6% and 11.5% in 2021 and 2022, there remains a trade finance gap
of US$2.5tn, a sign of the limited financing available to meet increasing
demand.
Tradeteq’s platform converts
trade finance and private debt assets into tradeable securities, thereby
creating much needed liquidity in both markets. More than US$3 billion worth of
notes have been issued under the platform’s securitisation as a service offer,
and Tradeteq has serviced over 140 clients, which have collectively financed more
than two million instruments through the platform.
Mattia Tomba, Head of
International Markets at Tradeteq, commented: “These
results should serve as a call to transform access to private debt and trade
finance investment, at a time where demand for both is growing rapidly. With any shifts in regulation and compliance likely
to take time, Tradeteq’s mission
to facilitate transactions between institutional investors and trade finance
and private debt originators is a swifter solution to creating liquidity
in a traditionally opaque market. This
is vital to boost corporate lending, which is one of the
key factors that will ensure every great idea is funded and help accelerate economic
recovery.”
For more information visit Tradeteq