Investors Eye Emerging Market Private Credit as Allocation Gap Narrows

The shift comes as appetite for emerging markets gains traction, even as 40% of the 250 decision-makers polled by Gemcorp currently hold zero allocation in the sector. Risk perception remains the primary hurdle, with over 70% of respondents citing higher volatility in developing regions compared to their domestic counterparts. Felipe Berliner, co-founder of Gemcorp, suggests this caution stems from a lack of familiarity with the structural protections inherent in these specific credit vehicles.

Concerns regarding sustainability in developed world markets are also fueling this pivot. With over 90% of those surveyed identifying rising defaults in developed nations as a challenge, the search for alternatives has intensified. This momentum is already visible in the numbers, with a record $22.3 billion in private credit flowing into emerging markets last year, according to the Global Private Capital Association. Regional disparities are stark: while 90% of Middle Eastern investors are already active in the space, only 42% of North American firms have followed suit, signaling a significant runway for future growth.