How private credit transactions are priced in Asia Pacific — the factors that drive cost up and down, what you can negotiate, and how to present your transaction to achieve the best outcome.
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
One of the most common questions CFOs and business owners ask about private credit is: what will it cost? The honest answer is that there is no single answer, private credit pricing is deal-specific, and every transaction is priced based on its individual characteristics. But understanding the factors that drive private credit pricing gives you significant leverage.
Understanding what drives your private credit pricing is the first step to improving it. The best-prepared borrowers consistently achieve better terms.
The Core Pricing Drivers
Collateral quality and liquidity
The single most important pricing driver. Collateral that is high in value, easy to value independently, and liquid in a realisation scenario commands significantly better pricing than collateral that is specialised, illiquid, or difficult to value. Prime commercial real estate in Singapore or Sydney prices better than specialised industrial assets in secondary markets.
Loan-to-value ratio
The relationship between the loan amount and the value of the underlying collateral is a fundamental pricing driver. Lower LTV, more collateral coverage relative to the loan amount, provides the lender with a larger buffer against collateral value deterioration and translates directly into better pricing.
Clarity and certainty of repayment
A transaction with a clearly defined, contracted, time-bound repayment source, a specific asset sale, a committed refinancing, a contracted equity raise, prices better than one where repayment depends on business performance or a general refinancing plan.
Business cash flow quality
The underlying business's revenue stability, margin consistency, and customer concentration directly influence pricing. Contracted, recurring revenues from creditworthy customers price better than project-based, lumpy, or highly concentrated revenues.
Tenor
Shorter-term transactions typically price tighter than longer ones because the lender's uncertainty about future events is lower.
Jurisdiction
Markets with reliable contract enforcement, efficient security registration, and predictable insolvency frameworks price better than those with legal uncertainty or enforcement risk.
Deal complexity
Multi-jurisdiction structures, complex ownership arrangements, and regulatory complications all require additional underwriting effort and are reflected in pricing. Simplifying your structure where possible consistently improves pricing.
What You Can Negotiate
Pricing: Within a range, pricing is negotiable particularly if you can demonstrate superior collateral quality or additional security that was not initially presented.
Interest payment structure: Current pay vs rolled-up interest is typically negotiable. Rolled-up interest preserves cash flow during the loan period and suits liquidity-constrained situations.
Prepayment terms: The right to repay early without penalty is a commercially important term that many borrowers do not negotiate but should.
Covenant package: The specific incurrence-based covenants, their thresholds, and any cure provisions are negotiable and should be reviewed carefully by the borrower's legal team.
Reporting obligations: The frequency, format, and scope of financial reporting obligations can be negotiated to reduce the ongoing administrative burden.
How to Present Your Transaction to Achieve the Best Terms
The quality of your transaction presentation directly affects the terms you achieve. Lenders price for uncertainty. The more uncertainty you eliminate through preparation, the better your pricing:
Provide clean, current, audited or reviewed financial statements for the last 2–3 years
Prepare a clear, professionally presented information memorandum covering the business, the capital requirement, use of proceeds, and the repayment plan
Obtain independent valuations of all significant collateral assets before approaching lenders
Resolve any outstanding legal issues — disputes, encumbrances, title complications — before they emerge in due diligence
Be transparent about the business's history, including any periods of underperformance or restructuring
Have a clear, credible, time-bound repayment plan and be prepared to explain it in detail
GMG Capital Advisory advises borrowers on transaction preparation and presentation as part of our arrangement service. A well-prepared transaction consistently achieves better terms. Our experience across the Asia Pacific private credit market means we know exactly what each lender wants to see.
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
