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1、KKR CREDIT&MARKETS|Building Upon Our Roots:Asia Pacifics Credit Transformation KKR CREDIT&MARKETS Building Upon Our Roots:Asia Pacifics Credit Transformation For Professional Investors OnlyNote:Unless indicated,the above reflects the current market views,opinions and expectations of KKR based on its

2、 historic experience and other analysis.Historic market trends are not reliable indicators of actual future market behavior or future performance which may differ materially,and are not to be relied upon as KKR CREDIT&MARKETS|Building Upon Our Roots:Asia Pacifics Credit Transformation Important Info

3、rmationThis document has been prepared solely for informational purposes.This document is not research and should not be treated as research.This document does not represent valuation judgments with respect to any financial instrument,issuer,security or sector that may be described or referenced her

4、ein and does not represent a formal or official view of KKR.This document is not intended to,and does not,relate specifically to any investment strategy or product that KKR offers.It is being provided merely to provide a framework to assist in the implementation of an investors own analysis and an i

5、nvestors own views on the topic discussed herein.The information contained herein is only as current as of the date indicated,and may be superseded by subsequent market events or for other reasons.Charts and graphs provided herein are for illustrative purposes only.The information in this document h

6、as been developed internally and/or obtained from sources believed to be reliable;however,KKR does not guarantee the accuracy,adequacy or completeness of such information.Nothing contained herein constitutes investment,legal,tax or other advice nor is it to be relied on in making an investment or ot

7、her decision.Opinions or statements regarding financial market trends are based on current market conditions and are subject to change without noticeThe information in this document may contain projections or other forward-looking statements regarding future events,targets,forecasts or expectations

8、regarding the strategies described herein,and is only current as of the date indicated.There is no assurance that such events or targets will be achieved,and may be significantly different from that shown here.The information in this document,including statements concerning financial market trends,i

9、s based on current market conditions,which will fluctuate and may be superseded by subsequent market events or for other reasons.Historic market trends are not reliable indicators of actual future market behavior or future performance of any particular investment which may differ materially,and shou

10、ld not be relied upon as such.This document should not be viewed as a current or past recommendation or a solicitation of an offer to buy or sell any securities or to adopt any investment strategy.Note:Unless indicated,the above reflects the current market views,opinions and expectations of KKR base

11、d on its historic experience and other analysis.Historic market trends are not reliable indicators of actual future market behavior or future performance which may differ materially,and are not to be relied upon as 2KKR CREDIT&MARKETS|Building Upon Our Roots:Asia Pacifics Credit Transformation Execu

12、tive SummaryAsias public and private credit markets present a rare opportunity for investors:a chance to invest in a region where growth remains resilient,demand for credit outstrips supply,and structural market inefficiencies play to the strengths of fundamental credit investors with local knowledg

13、e and relationships across the region.The longer-term thesis for investing in Asia Pacific credit has a great deal to do with the macroeconomic evolution and complexity of the region.Despite Chinas slowdown,Asia Pacific continues to grow at twice the pace of the U.S.and Europe.Moreover,we believe lo

14、wer real yields should be a positive for valuations and a risk recalibration has helped to reshape the Asia Pacific landscape.For many years,real estate issuers played an outsized role in Asia Pacifics liquid credit markets and were the primary driver of the markets exponential growth.However,a wave

15、 of defaults amongst Chinese real estate developers catalyzed a wide reset in asset valuations that extended beyond the property sector,dramatically shifted the composition of the market,and eroded investor confidence.In our view,the sell-off created attractive entry points for investors and compell

16、ing relative value compared to the United States and Europe.As we reflect upon the last 18 months of changes across the market,there is tremendous need for capital at a time when compelling relative value exists across the region.Though market volatility persists and higher interest rates continue t

17、o be digested,there remain sound issuers in need of near-term capital solutions.From a global relative value perspective,we believe valuations in the Asia Pacific market provide an attractive opportunity for diversification and total return in a portfolio with generally lower leverage levels(ex-Chin

18、a).While regional nuances can contribute to complexity in investing across Asia Pacific,we believe that active management and a local presence are prerequisites to success.Each country has macro,political,and fiscal idiosyncrasies,so in our view,there is no“One-Asia”.In our 20-plus year track record

19、 investing in Asia Pacific,we have found that having deep connections in the region,an on-the-ground presence,and an active and selective investment approach that prioritizes principal protection and durable cash flows is invaluable for producing and executing on differentiated investment insights.T

20、he trust we have built further facilitates our Written by:Brian DillardPartnerHead of Asia CreditDengzhao PanManaging DirectorHead of Asia Liquid CreditKristopher NovellManaging DirectorHead of Credit Portfolio Construction&AnalyticsAdditional Contributions From:Diane RaposioPartner Credit&MarketsTa

21、l Reback Director Credit&MarketsTom Hobby Principal Global Client Solutions Note:Unless indicated,the above reflects the current market views,opinions and expectations of KKR based on its historic experience and other analysis.Historic market trends are not reliable indicators of actual future marke

22、t behavior or future performance which may differ materially,and are not to be relied upon as 3KKR CREDIT&MARKETS|Building Upon Our Roots:Asia Pacifics Credit Transformation investment processes enabling us to have a deep understanding of the local economies.Pairing our integrated resources with a d

23、iversified investment tool kit enables our team to be agile,proactive and establish conviction for our investors.Asia Pacific continues to march to a different economic beat compared to both Europe and North America.Broadly,the economic outlook continues to gain momentum following the countries re-o

24、pening post COVID.We are energized by the opportunity this pickup in activity presents,including an uptick in business travel and tourism that has spurred positive economic activity across the region.Importantly,when the Fed begins its easing campaign,both lower interest rates and a weaker U.S.dolla

25、r could become additional tailwinds to growth.For example,the economic backdrop and growth cycle within Japan is very different than what China is experiencing.Additionally,we view Southeast Asia as a diverse set of economies and underlying macro forces contributing to a broad investment opportunity

26、 set.As we look deeper at the Asia Pacific markets,valuations and sentiment have not yet expressed the same optimism and thus we believe there is further upside to be priced in.The drawdowns in the Asia high yield(“HY”)and investment grade(“IG)markets persist and these markets are still well below t

27、heir peak point from early 2020.1 EXHIBIT 1|Asia High Yield&Investment Grade Yearly Returns80%60%40%20%0%-20%-40%2005200620072008200920102011201220132014201520162017201820192020202120222023YTD 2024ACIG Yearly ReturnsACHY Yearly ReturnsThe divergence between the broader macro picture and the credit m

28、arkets performance has left some investors asking,“Is now the right time to lean in?”Source:Bloomberg,Bank of America.Asia High Yield Market represented by ICE BofA Asian Dollar High Yield Corporate Index and Asia Investment Grade Market represented by ICE BofA Asian Dollar Investment Grade Corporat

29、e Index.Information as of January 31,20243.9%5.3%5.5%-7.0%23.9%9.3%5.0%12.1%-1.3%8.2%2.4%4.4%5.0%0.0%11.0%7.3%0.0%-10.5%7.5%0.2%6.7%8.0%4.7%-34.4%77.0%21.8%-4.9%25.7%3.1%4.7%4.6%14.3%6.8%-3.3%14.4%8.8%-19.7%-19.9%1.1%2.9%In the past 20 years,there has never been two back-to-back negative market year

30、s.Note:Unless indicated,the above reflects the current market views,opinions and expectations of KKR based on its historic experience and other analysis.Historic market trends are not reliable indicators of actual future market behavior or future performance which may differ materially,and are not t

31、o be relied upon as 4KKR CREDIT&MARKETS|Building Upon Our Roots:Asia Pacifics Credit Transformation Table of Contents1.What does the Asia traded credit market look like,particularly compared to its U.S.and European counterparts?52.What are the main structural considerations in this market?63.How doe

32、s the issuer composition of this market play into the opportunity for investors?74.What is the longer-term impact of the real estate shock on Asia Pacific credit markets?75.Simply put,why invest in Asia Credit now?86.How can investors think about capitalizing on this opportunity?10Note:Unless indica

33、ted,the above reflects the current market views,opinions and expectations of KKR based on its historic experience and other analysis.Historic market trends are not reliable indicators of actual future market behavior or future performance which may differ materially,and are not to be relied upon as

34、4Note:Unless indicated,the above reflects the current market views,opinions and expectations of KKR based on its historic experience and other analysis.Historic market trends are not reliable indicators of actual future market behavior or future performance which may differ materially,and are not to

35、 be relied upon as 5KKR CREDIT&MARKETS|Building Upon Our Roots:Asia Pacifics Credit Transformation We recently sat down with Brian Dillard,Dengzhao Pan and Kristopher Novell to discuss how the structural market inefficiencies in the traded credit market contributed to the vast sell-off and why it is

36、 an attractive time to invest in both private and public credit in the region.What does the Asia traded credit market look like,particularly compared to its U.S.and European counterparts?Including local currency,Asia Pacific is the second largest credit market in the world.2 It is also less mature a

37、nd less liquid than its U.S.and European counterparts and can often be more volatile due to persistent structural inefficiencies,fragmentation and the historical concentration of both the issuer and passive investor base.However,it is precisely these inefficiencies coupled with growing tailwinds and

38、 dispersion that present compelling relative value opportunities for investors.While the USD-denominated Asia Pacific corporate bond market is sizeable at$1.6 trillion,3 it is equivalent to a sliver of the U.S.and European comps,at$10.3 trillion4 and$3.5 trillion,5 respectively.Although smaller in n

39、otional size today,the Asia Pacific dollar bond market is growing with evolving financing needs.For example,a new regional U.S.dollar corporate bond index that includes Japan,Australia and New Zealand launched last year,expanding the investible market even further.We believe the expansion of the dol

40、lar-denominated corporate bond market will provide additional opportunities for investors.KKR CREDIT&MARKETS|Building Upon Our Roots:Asia Pacifics Credit Transformation Note:Unless indicated,the above reflects the current market views,opinions and expectations of KKR based on its historic experience

41、 and other analysis.Historic market trends are not reliable indicators of actual future market behavior or future performance which may differ materially,and are not to be relied upon as 6KKR CREDIT&MARKETS|Building Upon Our Roots:Asia Pacifics Credit Transformation What are the main structural cons

42、iderations in this market?The Asia Pacific traded credit market has an outsized share of passive investors.This contributes to technical volatility that can often distort the fundamental value of many credits and cause mark-to-market swings.However,this technical volatility creates an abundance of o

43、pportunities for disciplined fundamental credit investors.For example,approximately 52%6 of the Asia Pacific liquid(traded)credit market is comprised of asset managers,the majority of which run passive strategies and are typically buyers of index or daily liquidity vehicles.Daily liquidity vehicles

44、are usually rules-based and contribute to the high degree of market asymmetry.Flows into these funds and ETFs can often be sizable and drive either surges in demand or outflows that result in forced selling.Less active buyers,such as traditional banks and insurance companies,comprise 40%of the marke

45、t and tend to employ a“buy-and-hold”strategy.In addition,the private banking buyer base,approximately 7%of the market,is also“buy-and-hold”but frequently employs leverage.6 Adding leverage may increase the risk of margin calls and consequently downward pricing pressure when liquidity is needed.The r

46、emaining 1%subsegment of“other”investors are the absolute return buyer.These are the true active managers;however,most of these are hedge funds focused on distressed opportunities or China property restructuring opportunities.The composition of the market creates what we refer to as No Mans Land:a g

47、ap in the market where credits may have been technically impacted rather than fundamentally.As an example,our team identified an opportunity with perceived“busted”convertibles that seemingly had no natural buyers but offered attractive economics and downside protection.Similar to the converts,many c

48、redits do not possess enough upside convexity to generate high teens returns,and thus are overlooked by the hedge fund community and factored out from many passive indices.Our approach is to identify value through fundamental credit analysis on individual names or event driven theses that strive to

49、identify the upside potential across these misunderstood assets.We believe this can deliver a portfolio of double digit returns with highly attractive risk adjusted returns.EXHIBIT 2|Asia High Yield Investor Base7%Private Bank2%Pension/Insurance38%Banks52%Asset Managers1%OtherThe composition of the

50、market creates what we refer to as No Mans Land:a gap in the market where credits may have been technically impacted rather than fundamentally.Source:J.P.Morgan,Bond Radar,Bloomberg Finance L.P.Data as of 2022Note:Unless indicated,the above reflects the current market views,opinions and expectations

51、 of KKR based on its historic experience and other analysis.Historic market trends are not reliable indicators of actual future market behavior or future performance which may differ materially,and are not to be relied upon as 7KKR CREDIT&MARKETS|Building Upon Our Roots:Asia Pacifics Credit Transfor

52、mation How does the issuer composition of this market play into the opportunity for investors?The Asia Pacific liquid credit market has had a longstanding skew toward real estate,and the evolution of that sector weighting is an important driver behind large technical swings in the market.Chinas rapi

53、d expansion,specifically in property development and related industries,drove a large share of the liquid credit market growth over the last decade.Developers issued large amounts of debt,leading to a vast increase in the size of the leveraged credit market in Asia.To quantify,a typical real estate

54、development project historically had equity contributions of less than 5%,with 95%being funded by debt.As the Chinese property market softened,a wave of defaults occurred in 2021 and 2022 and many of these issuers exited the market.Ahead of the real estate induced stress in July 2020,real estate rel

55、ated issuers in China represented 54.3%7 compared to 6.6%8 of the market in January 2024.During this period,a large amount of the markets performance was highly correlated to the Chinese property market.So,what does this shift mean for the market?The fact that Asia Pacifics market is concentrated in

56、 passive vehicles means that volatility can trigger dramatic price swings,or“gaps”.During the large wave of property-related defaults,the market sold off as funds experienced negative pressure,leading to large and sometimes damaging outflows.This catalyzed a knock-on movement across the market.Inves

57、tors fled and liquidity dried up,which impacted the valuations of a broad array of issuers unrelated to the real estate sector;a stark illustration of how strong technical catalysts can be in this market.Importantly,the fundamental risk associated with China property bonds was an offshore-onshore mi

58、smatch.Most property bonds are held by offshore investors;however,the actual projects are predominantly onshore which means there is no recourse for bondholders,exacerbating the volatility when things go wrong.What is the longer-term impact of the real estate shock on Asia Pacific credit markets?The

59、 market upheaval driven by the real estate shock resulted in a substantial risk recalibration.Ultimately,we believe this has been a net positive for the investment landscape,creating a more diverse base of issuers from both a sector and geographic perspective.The property sectors stress also resulte

60、d in a lack of trust and consensus as investors assessed how to proceed,ultimately leading to outflows.From peak to trough,the Asian Dollar High Yield Corporate Index fell-51.0%on a total return basis9 from April 2021 to November 2022.This technical-driven selling created a cascade effect and cataly

61、zed a reset in valuations.After the large sell-off,we believe the Asia Pacific credit market offers compelling investment opportunities,particularly for investors who can lean in opportunistically with nimble,flexible capital.Valuations across industries have recalibrated,dispersion exists and the e

62、xpansion of the market to include countries such as Japan and Australia should create a deeper assortment of mature businesses.Not only is the market more diversified than ever before,but it is also growing,with an increasing number of issuers in need of financing ahead of the upcoming maturity wall

63、.Although pending maturities impact many issuers globally,they are especially pronounced in Asia.For example,roughly 56%of the outstanding high yield debt is set to mature in the next three years and roughly 21%10 by the end of 2025.We believe issuers will fill the gap using both private and broadly

64、 syndicated credit markets.Lenders who can provide solutions across both are likely to be at an advantage.Note:Unless indicated,the above reflects the current market views,opinions and expectations of KKR based on its historic experience and other analysis.Historic market trends are not reliable ind

65、icators of actual future market behavior or future performance which may differ materially,and are not to be relied upon as 8KKR CREDIT&MARKETS|Building Upon Our Roots:Asia Pacifics Credit Transformation EXHIBIT 3|Asia High Yield Market Maturity Breakout40%35%30%25%20%15%10%5%0%202520262027202820292

66、030203120322033&beyondSource:Bloomberg.Market represented by ICE BofA Asian Dollar High Yield Index.Information as of 1/31/2024.Simply put,why invest in Asia Credit now?We are at an inflection point for Asia Pacific credit markets following the wave of defaults among Chinese property developers.The

67、recent volatility has catalyzed structural changes that have removed many of the“risky”players from the index.Todays market also presents a vastly different return potential opportunity than it did previously.The market is now composed of higher quality issuers and investors can likely achieve favor

68、able economics with more balanced sector exposure.Yet,despite the positive structural evolution in the market,we still have not seen valuations revert to normalized levels.At$87.63 the weighted average price provides attractive upside price convexity alongside a compelling 10.0%effective yield,11 as

69、 of January 31,2024.We believe this is an attractive entry point relative to the opportunity set in Europe($92.84 and 6.1%)12 and in the U.S.($92.54 and 7.6%).13EXHIBIT 4|Asia High Yield Market Issuer Composition:Then and Now57.1%Real Estate42.9%OtherJuly 31,2020January 31,20240.4%Services9.9%Real E

70、state1.4%Tech.&Electronics3.1%Telecommunications4.9%Transportation15.1%Utility1%Automotive20.5%Banking2.1%Capital Goods11.1%Basic Industry6.2%Financial Services18.7%Leisure0.5%Consumer Goods5.2%EnergySource:Bloomberg,ICE BofA.Asia High Yield Market presented by ICE BofA Asian Dollar High Yield Index

71、.Information as of July 31,2020 and January 31,2024Approximately 56%of outstanding High Yield debt is set to mature in the next 3 yearsNote:Unless indicated,the above reflects the current market views,opinions and expectations of KKR based on its historic experience and other analysis.Historic marke

72、t trends are not reliable indicators of actual future market behavior or future performance which may differ materially,and are not to be relied upon as 9KKR CREDIT&MARKETS|Building Upon Our Roots:Asia Pacifics Credit Transformation The fact that demand for credit outstrips supply makes it a great t

73、ime to be a lender generally,but this is especially apparent in Asia Pacific where the recent market sell off has increased the difficulty for issuers to obtain financing.Banks have been more stringent on lending,market volatility has made it more difficult for public syndication execution,and inves

74、tor support has been muted.It is likely that this dynamic will persist for the foreseeable future or may even intensify.While Chinas reopening has not been as robust as many anticipated,China and the Asia Pacific region nonetheless grew faster than its Western peers in 2023.We still expect this to c

75、ontinue tin 2024 and beyond.Putting all this together,we believe the opportunity set in Asia Pacific credit is currently very compelling.The dislocation in the real estate market prominently highlighted the inefficiency and nascency of the market,particularly in the way tight liquidity and a high ma

76、rket concentration of passive investment strategies can exacerbate mark-to-market volatility and trigger widespread valuation declines that may be divorced from fundamentals.This type of structural inefficiency and disruption creates opportunity for active managers with a regional and local approach

77、 to identifying value who can step in,underwrite,and provide liquidity selectively to the right issuers,helping to drive differentiated results.Note:Unless indicated,the above reflects the current market views,opinions and expectations of KKR based on its historic experience and other analysis.Histo

78、ric market trends are not reliable indicators of actual future market behavior or future performance which may differ materially,and are not to be relied upon as 9The fact that demand for credit outstrips supply makes it a great time to be a lender generally,but this is especially apparent in Asia P

79、acific where the recent market sell off has increased the difficulty for issuers to obtain financing.Note:Unless indicated,the above reflects the current market views,opinions and expectations of KKR based on its historic experience and other analysis.Historic market trends are not reliable indicato

80、rs of actual future market behavior or future performance which may differ materially,and are not to be relied upon as 10KKR CREDIT&MARKETS|Building Upon Our Roots:Asia Pacifics Credit Transformation economics and downside protection.This trend is global but amplified within Asia Pacific as each iss

81、uer faces its own unique financing needs pursuant to jurisdiction,underscoring the need to for on the ground expertise.Investment Grade“IG”credits(BBB Rated):We continue to see a high degree of valuation skew from a ratings perspective.IG assets are trading at a relatively cheap price level due to t

82、he sell-off.Given liquidity was scarce,asset managers sold the perceived“safer”risk and positions with strong fundamentals to access immediate liquidity,ultimately contributing to declining prices of lower rated investment grade paper.For example,an investor can achieve a yield of 6.3%as of January

83、31,2024,for IG risk.15 Select IG names offer high single to low double-digit yield with upside price convexity,creating a strong total return potential.As such,we are leaning into BBB-assets as they appear attractive from both a yield and price standpoint.Convertible bonds:The Asia traded credit mar

84、ket is less mature than that of the U.S.or Europe,and both managing risk and identifying opportunities requires more specialization.We believe in keeping it simple and moving up in the capital structure or up in quality for better risk adjusted reward given persisting macro uncertainties.High qualit

85、y convertibles(BB-rated)with puts that provide protection for the bondholder offer one way to express this view and while getting both strong upside potential and downside protection.These structures tend to be more borrower friendly,with protection for the investor in a downside scenario,typically

86、have lower volatility,and could offer potential upside in the event of a conversion.Additionally,these assets have no natural market buyer and when they sell-off,can widen 150 200 bps relative to the bullet bonds from the same issuer.How can investors think about capitalizing on this opportunity?In

87、Asia,we emphasize the importance of shying away from passively managed credit vehicles,even more than in the U.S.and European credit markets.Technical factors not only contribute to pricing volatility but can also obfuscate credit fundamentals.There are also pockets of the market that lack natural b

88、uyers(i.e.busted convertible bonds),which is where fundamental credit underwriting creates investment opportunity for actively managed,flexible pools of capital.Active management,bolstered by bottoms-up research,with a laser focus on downside protection and durable cash flows,are key to being succes

89、sful in Asia.Our team is looking at the knock-on impacts from the broader valuation reset within the markets.Some key areas we see as an opportunity:Proactivity around the need for capital:Over half of outstanding high yield debt in the region comes due in the next three years.14 As we look towards

90、ways to address this maturity wall,the solution will likely fall as a balance between publicly syndicated debt and privately originated credit financing.We believe the private and public credit markets need one another to optimize outcomes and maintain healthy markets.As Christopher Sheldon,Co-Head

91、of Credit&Markets,emphasizes in the Financial Times Op-Ed Why Private Credit Still Needs Public Markets,we believe these financing channels are complimentary,and their symbiotic relationship is key to fully addressing issuers needs.Customized and hybrid capital solutions capabilities offer additiona

92、l flexibility in addressing financing needs.The benefit to hybrid capital solutions is the ability to structure contractual KKR CREDIT&MARKETS|Building Upon Our Roots:Asia Pacifics Credit Transformation Note:Unless indicated,the above reflects the current market views,opinions and expectations of KK

93、R based on its historic experience and other analysis.Historic market trends are not reliable indicators of actual future market behavior or future performance which may differ materially,and are not to be relied upon as 11KKR CREDIT&MARKETS|Building Upon Our Roots:Asia Pacifics Credit Transformatio

94、n Endnotes1.Market defined as ICE BofA Asian Dollar High Yield Corporate Index and ICE BofA Asian Dollar Investment Grade Corporate Index.Information as of January 31,2024.2.Source:Bank of America,October 2022.Asian Credit Market Primer.3.Market defined as ICE BofA All Maturity Asia Pacific Dollar I

95、ndex and ICE BofA Asia Convertible ex.Mandatory Indexes as of January 31,2024.4.Market defined as ICE BAML U.S.High Yield Index,ICE BAML U.S.Corporate Index,and ICE BofA US Convertible Excluding Mandatory Index as of January 31,2024.5.Market defined as ICE BofA Euro High Yield Index,ICE BofA Euro Co

96、rporate Index,ICE BofA European Convertible Excluding Mandatory Index as of January 31,2024.6.Source:J.P.Morgan,Bond Radar,Bloomberg Finance L.P.Data as of 2022.7.Source:Bloomberg,BAML.Information as of July 31,2020.“Market”represented by ACHY Index,BICS Industry Group.8.Source:Bloomberg,BAML.Inform

97、ation as of January 31,2024.“Market”represented by ACHY Index,Level 3 Group.9.Source:Bloomberg.Peak-to-trough defined as the period 5/26/2021-11/3/2022.Index:ACHY Index.10.Source:Bloomberg.Market represented by ACHY Index.Information as of 1/31/2024.11.Source:Bloomberg,as of January 31,2024.Index:AC

98、HY Index.Stats are Par weighted price and effective yield.12.Source:Bloomberg,as of January 31,2024.Index:HE00 Index.Stats are Par weighted price and effective yield.13.Source:Bloomberg,as of January 31,2024.Index:H0A0 Index.Stats are Par weighted price and effective yield.14.Source:Bloomberg.Market

99、 represented by ACHY Index.Information as of 1/31/2024.15.Source:Bloomberg.Represents ACIG BBB-portion of the market and its related effective yield.As of 1/31/2024.Select exposure in Hong Kong:We believe issuers in Hong Kong with offshore assets and more limited exposure to China could have attract

100、ive upside potential given the residual overhang from Chinas real estate reset.We see value in select BB&BBB-rated insurance or financial names that have strong fundamentals,durable cash flows,and offer an attractive entry point.Highly disciplined approach to China exposure:Even with the real estate

101、 turbulence,it is hard not to ignore the opportunity set in China,the regions largest economy and we take a highly regimented approach to investing there.Large technology companies with positive net cash flows and no refinancing issues,as well as IG insurance companies with durable cash flows,look a

102、ttractive on a risk adjusted basis and stand to benefit from a risk recalibration within the market.Our Firms 20 plus year history in Asia Pacific is an invaluable resource for our team that continues to provide proprietary diligence insights and origination opportunities across the credit landscape

103、.This longstanding local presence in the region,built on trusted relationships and a differentiated underwriting and risk management approach,is a strong competitive advantage,in our view,and has been integral to KKRs investment success within the region.We believe the forward opportunity is immense

104、 for fundamental credit investors and our teams are energized about the opportunity set ahead of us in 2024 and beyond.KKR CREDIT&MARKETS|Building Upon Our Roots:Asia Pacifics Credit Transformation Kohlberg Kravis Roberts&Co.L.P.30 Hudson YardsNew York,New York 10001212-750-Twitter:KKR_CoLinkedin:/company/kkr Visit us on YouTube