The global Debt financing market is experiencing a sizeable growth, and will grow considerably in the next few years.  Debt financing is a mechanism in which a company borrows money from a lender and pays back at a future date with interest. Sometimes it is easier, or economical, than taking a bank loan. According to experts, debt financing is a more beneficial way in comparison with issuing stocks to investors. Startup companies and smaller businesses use debt financing to expand their operations and maintain ownership of their business. The main advantages of debt financing are debt interest costs that are fully tax-deductible and also provide stability in budgeting and planning. Debt financing does not include any provision for ownership of the company in the majority of cases.

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COVID-19 scenario analysis: 

  • With the outbreak of COVID-19, the tourism, aviation, and hospitality industry have been affected badly and consequently, the debt financing market has experienced a huge financial crisis.
  • There has been a steep decline in demand from businesses that provide dine out, shopping in stores, offline events, and entertainment facilities.
  • The economic slowdown across the globe has majorly impacted the key players as well.  
  • According to the data analysis by Refinitiv LPC, in the Asia Pacific region (except Japan), the loan volume dropped by 39% in the first quarter, from US$113.79 Bn to US$68.92 Bn.
  • Top impacting factors: Market Scenario Analysis, Trends, Drivers and Impact Analysis

Inflation, real interest rates, and credit risks are the factors that drive the global debt financing market size. However, US-China trade tensions and weak documentation may hinder the market growth. Contrarily, expansion of private lending sources is expected to create lucrative opportunities in the near future.

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Growth in the private sources segment leads to global debt finance market development 

The private debt financing market is one of the rapidly developing and most desired resource classes for financial specialists; it plays a crucial role in lending money to small and mid-sized organizations. The private lending market has grown significantly over the last few decades. This change mainly happened due to the contribution of big companies like Citigroup, Bank of America, JP Morgan, and Wells Fargo. It’s expected that the private debt finance market will keep on playing an important role in the development of the U.S. and world economy. Advantages offered by private source debt financing such as high returns, predictive cash flow, lower volatility, and increased diversification tend to pave the way for new avenues for the frontrunners in the industry.

Goldbell Financial Services, a Singapore based business finance provider, makes partnership with Mambu, to boost its private debt investment platform through a SaaS banking platform known as Goldbell Evolution Network (GEN). Canada Pension Plan Investment Board (CPPIB) is planning to re-enter the debt finance market. On the other hand, CPPIB is one of the largest pension fund managers in Canada.

Surge in demand from Asia-pacific region fuels the market growth

The Asia-pacific region has almost driven the world in terms of economic growth in the last few years, as the debt finance market helped in the development of bridges, highways, apartment towers, airports, and so on. The non-banking sector in Asia-Pacific is growing at a fast pace and has ushered in an array of opportunities for the budding investors. Whatsoever, the major financial deals across Asia have mainly been propelled by the real estate sector. China, India, Australia, Indonesia, and Vietnam are considered as the most growing markets in this province.

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According to Australian Prudential Regulation Authority, Overseas bank in Australia has increased its commercial real estate loan exposure by 136 percent for the duration Dec 2015 to Dec 2018. Lenders from different regions are playing a significant role in this sector. CapitaLand, a Singapore based real estate giant reported that it has raised US$556 million for its first China-centered debt fund.

Key benefits of the report:

  • This study presents the analytical depiction of the debt financing market industry along with the current trends and future estimations to determine the imminent investment pockets.
  • The report presents information related to key drivers, restraints, and opportunities along with detailed analysis of the debt financing market share.
  • The current market is quantitatively analyzed to highlight the debt financing market growth scenario.
  • Porter’s five forces analysis illustrates the potency of buyers & suppliers in the market. 
  • The report provides a detailed Debt financing market analysis based on competitive intensity and how the competition will take shape in the coming years. 

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