The Chinese NPL market in 2020: Regulatory catalyst may lead to higher volumes

February 2020

International investors deployed over US$ 1 billion of capital into Chinese NPLs in 2019, across 14 transactions. 

Investors we speak to have been targeting 13% to 15%+ annualised returns and then adding leverage to boost this. Rumours have circulated over actual profitability and in all likelihood, some early deals probably have underperformed. 

The recent phase one trade agreement indicates that US investors will be allowed to apply for Provincial AMC licenses: potentially transforming the way that international investors can access the supply of NPLs. 

This report examines the market and examines what is needed to allow investors to scale up the amount of capital they can put to work. 

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James Dilley

Partner, PwC China

Tel: +[852] 2289 2497

Chen Lau

Partner, PwC China

Tel: +[86] (10) 6533 2208

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