BlackRock’s Asia private credit fund sees China borrower default
The default comes at a time when the US$1.8 trillion asset class is facing deeper woes in the US after a wave of redemption requests
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[HONG KONG] A BlackRock private credit fund in Asia has suffered the first default by a borrower in its portfolio after a Chinese company failed to repay a loan, according to sources familiar with the matter.
The delinquency occurred on Apr 1, after Metcold Holdings, a Shanghai-based cold-chain infrastructure service provider, failed to repay the loan’s outstanding principal of US$27.5 million, said the sources who requested anonymity discussing private matters. The unpaid interest is around US$12 million, they added.
Metcold obtained the US$52.5 million lending facility four years ago, according to a document seen by Bloomberg News. It came under BlackRock’s Asia-Pacific Private Credit Opportunities Fund II that raised around US$435 million at its inception.
The default comes at a time when the US$1.8 trillion asset class is facing deeper woes in the US after a wave of redemption requests. For BlackRock, it represents a further setback for the world’s largest money manager’s Asia private credit strategy, which has struggled with performance, an aborted partnership, as well as the departure of key investors and senior executives.
While delinquencies in private credit are not unusual, concerns are growing that they may start rising due to risks such as AI’s disruptive effects on businesses and elevated borrowing costs. In an analysis published in February, UBS Group warned that default rates could surge as high as 15 per cent in a worst scenario from the current 3 to 5 per cent range.
BlackRock has engaged lawyers and financial advisers to explore options to deal with the default, the sources said.
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BlackRock declined to comment. Metcold did not immediately respond to a request for comment.
Metcold voluntarily repaid US$10 million of the loan’s principal in April 2024, followed by another US$15 million in December that year, shows the document seen by Bloomberg News.
BlackRock obtained investor consent in January to extend the investment period of the Asia-Pacific Private Credit Opportunities Fund II, its second in the region, for another year. BLOOMBERG
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