A practical guide to replacing a bank credit facility with private credit: when to do it, how to structure it, and how to ensure a smooth transition.
Published by
Donald Klip | Co-Founder, Global Mortgage Group | Head, GMG Capital Advisory
30 years of institutional finance. Former hedge fund founder. Senior roles at top global investment banks. GMG Capital Advisory arranges private credit and special situations finance of $10M–$100M for operating companies across Asia Pacific.
[email protected] | +65 9773 0273 | Singapore · Hong Kong | Asia-Pacific
Refinancing a corporate debt facility away from a bank and into private credit is one of the most strategic decisions an operating company CFO or business owner can make in the current Asia Pacific lending environment. Many businesses approach refinancing reactively. The most successful refinancing transactions are proactive ones.
The best time to refinance away from your bank is before your bank tells you to. The second best time is today.
Why Businesses Refinance Away from Banks
Reactive refinancing — bank-driven: The bank has withdrawn or reduced the facility. Covenant or pricing changes are unworkable. The facility is maturing and the bank will not renew on acceptable terms.
Strategic refinancing — borrower-driven: The business has outgrown its bank's appetite. The bank's covenant package constrains the growth strategy. A specific transaction requires capital the bank cannot provide.
The Refinancing Process Step by Step
Step 1: Define the refinancing requirement precisely
Total outstanding debt, maturity dates, existing covenants, prepayment penalties, security registered. This information drives the structure of the replacement facility.
Step 2: Prepare the business documentation package
Audited financials for the last two to three years, current management accounts, cash flow projections, asset schedule, corporate structure chart, and a clear description of the business.
Step 3: Engage a specialist early
For mid-market corporate refinancings in Asia Pacific, engaging GMG Capital Advisory at the outset saves significant time and typically results in better terms.
Step 4: Receive and negotiate term sheets
A well-presented refinancing opportunity will typically generate term sheets from one to three lenders within two weeks. Key parameters are all subject to commercial negotiation before signing.
Step 5: Due diligence and documentation
For well-prepared borrowers, due diligence can be completed in two to three weeks. Documentation follows in a further one to two weeks.
Step 6: Settlement and security transfer
The existing bank facility is repaid from the new facility drawdown. Existing security registrations are released and new security is registered. In most jurisdictions this can be coordinated to occur simultaneously.
What Changes When You Move from Bank to Private Credit
Direct lender access: You deal with the principals making decisions, not relationship managers relaying information to invisible credit committees.
Covenant flexibility: Private credit covenant packages are typically incurrence-based. The business has significantly more operational freedom.
Structured for your business: The facility is structured around your actual business, your cash flow cycle, seasonal patterns, growth plans.
Higher cost, lower friction: Private credit carries a higher interest rate than bank lending. But the elimination of maintenance covenants, speed of decision-making, and structural alignment often more than justify the premium.
A well-managed refinancing from bank to private credit for a mid-market operating company in Asia Pacific typically takes four to eight weeks from first lender engagement to drawdown. Contact GMG Capital Advisory for a preliminary assessment.
About GMG Capital Advisory
Donald Klip | Co-Founder, Global Mortgage Group | Head, GMG Capital Advisory
Donald Klip has 30 years of institutional finance experience spanning hedge fund management and senior roles at the world’s top global investment banks. GMG Capital Advisory specialises in arranging and structuring corporate debt financing of $10M–$100M for operating companies, asset owners, and project sponsors where conventional bank lending is unavailable, insufficient, or too slow. We operate across 23+ jurisdictions in Asia Pacific.
www.gmg.asia | [email protected] | +65 9773 0273 | Singapore · Hong Kong
The Debt Desk
Corporate private credit intelligence for Asia Pacific’s $10M–$100M middle market. Published by GMG Capital Advisory. Part of the Private Credit Asia content series.
www.gmg.asia | Read all 41 articles in the series
