McGuireWoods London debt finance partner Marc Naidoo recently wrote an article for Finance Derivative explaining the
growing potential for mutually beneficial relationships between
institutional investors and capital-hungry borrowers in emerging markets.
In the May 7, 2022, article, titled
“Safe Money Into Emerging Markets: Funding the Gap,” Naidoo described the lending gap that has developed as emerging markets,
especially in Africa, have turned away from resource-backed lending flowing
in from China that offers nominally low interest rates but imposes
aggressive collateral terms. Traditional sources of capital, meanwhile,
remain expensive for borrowers.
Institutional investors can help fill the need for capital, Naidoo wrote,
and in doing so, can diversify their portfolios and bolster their
environmental, social and governance (ESG) impact.
“Institutional investors can take the middle ground between aggressive debt
and cautious debt,” Naidoo explained. “What has accelerated this trend is
the ESG agenda that has come to the forefront both in collective
consciousness and in finance. The next decade will determine how successful
this trend can be, but there is ample opportunity for both emerging market
participants and safe money to create a mutually beneficial, and most
importantly, scalable relationship. It would seem that each party would
have a paramount role is shaping the policy of the other.”
Naidoo is a member of the five-person executive committee leading
ESG task force.