A BlackRock Inc. 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 people familiar with the matter.
The delinquency occurred on April 1, after Metcold Holdings Ltd., a Shanghai-based cold-chain infrastructure service provider, failed to repay the loan’s outstanding principal of $27.5 million, said the people who requested anonymity discussing private matters. The unpaid interest is around $12 million, they added.
Metcold obtained the $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 $435 million at its inception.
The default comes at a time when the $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 aren’t 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 AG warned that default rates could surge as high as 15% in a worst scenario from the current 3%-5% range.
BlackRock has engaged lawyers and financial advisers to explore options to deal with the default, the people said.
BlackRock declined to comment. Metcold didn’t immediately respond to a request for comment.
Metcold voluntarily repaid $10 million of the loan’s principal in April 2024, followed by another $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.
Written by: Trista Xinyi Luo and Kari Soo Lindberg @Bloomberg
The post “BlackRock’s Asia Private Credit Fund Sees China Borrower Default” first appeared on Bloomberg