Patria Prepares Next Vintage of Latin America Private Credit Strategy to Capture Structural Scarcity in Corporate Lending
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private creditfinancial
Private credit is a form of borrowing where companies or organizations obtain loans directly from private lenders rather than traditional banks or financial markets. It often involves customized financing arrangements that are not traded publicly, making it a way for businesses to access funding outside of standard channels. For investors, private credit offers the potential for higher returns, but typically comes with increased risk and less liquidity compared to more conventional investments.
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Senior secured describes a loan or bond that has first claim on a company’s assets and is backed by specific collateral, like a mortgage on property. For investors, that means they are paid before other creditors if the company struggles or is liquidated, reducing the chance of loss compared with unsecured or junior debt. Think of it as a front-of-the-line, collateral-backed claim that typically carries lower interest because of that added protection.
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Covenants are rules written into loan or bond contracts that require a company to do or avoid certain things—like keeping debt below a set level or not selling key assets. They matter to investors because they protect lenders and influence a company’s flexibility: tight covenants can limit growth plans but lower default risk, while loose covenants give freedom but increase credit risk, similar to how household rules affect a family’s budget choices.
asset-backedfinancial
Asset-backed describes a loan, bond, or security that is supported by a specific pool of tangible or financial items—such as loans, receivables, leases, or property—that can be sold or collected to pay investors if the borrower can’t. Think of it like a loan tied to collateral: if payments stop, the assets provide a safety net, which changes the investment’s risk, expected return, and how regulators treat it.
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Securitization is when a bank or company takes a bunch of loans or assets, like mortgages or car loans, and bundles them together into a single package. They then sell pieces of this package to investors, who receive regular payments from the borrowers. This process helps the original lender get money quickly and spreads the risk among many investors.
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Net debt to EBITDA is a financial ratio that compares a company's total debt, minus any cash it has on hand, to its earnings before interest, taxes, depreciation, and amortization (EBITDA). It indicates how many years it would take for a company to pay off its debt if all its earnings were used for that purpose. Investors use this ratio to assess the company's financial health and its ability to manage and repay its debts over time.
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Basis points are a way to measure small changes in interest rates or percentages, where one basis point equals 0.01%. For example, if a loan's interest rate increases by 50 basis points, it's gone up by 0.50%. They help people understand tiny differences in rates that can add up over time, making financial comparisons clearer.
interest coveragefinancial
Interest coverage is a measure of a company's ability to pay the interest on its debts with its earnings. It shows how comfortably the company can cover interest costs, similar to how many times a person’s income can pay their monthly bills. A higher interest coverage indicates the company is less likely to struggle to meet its interest payments, which can be reassuring for investors.
Builds on successful close of US$314 million dedicated Latin America private credit vintage and expands Patria’s 26-year, US$12.3* billion AUM regional credit platform
Highlights:
Patria is preparing the next vintage of its Latin America private credit strategy, targeting an under-levered corporate credit market where reliable capital is scarce.
Across more than 210 private credit and structured transactions, Patria has deployed more than US$3.1 billion across 24 industries and seven countries and delivered a historical unlevered IRR of 14.3% (USD deals), with consistent performance driven by structure and selectivity, not macro timing.
The portfolio reflects a focus on senior secured, US dollar-denominated loans structured with robust collateral, covenants, and cash-flow protections for mid-market and family-owned borrowers.
As of 31 December 2025, the fund deployed more than 70% of capital into 14 transactions.
Private credit represents less than 1% of a roughly US$2.3 trillion Latin American corporate credit system1, reflecting limited institutional allocation and a small number of scaled, dedicated managers.
LONDON--(BUSINESS WIRE)--
Patria Investments Limited (“Patria”) (NASDAQ: PAX), a global alternative asset manager with more than US$60.1* billion in AUM, announced today that it is preparing the next vintage of its Latin America private credit strategy.
The strategy will be designed to give global institutional investors access to a large, structurally under-levered corporate credit market where reliable capital remains scarce. Patria believes this structural scarcity, combined with a persistent, perception-based regional risk premium, can keep spreads elevated even when borrower fundamentals are resilient, supporting attractive yield without relying on higher leverage. The proposed vehicle builds on Patria’s 26-year, approximately US$12.3 billion* credit platform in Latin America.
The planned fund follows the successful close of Patria’s first dedicated private credit fund and related vehicles in May 2025 which raised US$314 million in commitments. As of 31 December 2025 the fund has already deployed more than 70% of capital into 14 transactions, generating a gross unlevered IRR of 15.6% with an average duration of 2.5 years. The portfolio reflects a focus on senior secured, US dollar-denominated loans structured with robust collateral, covenants, and cash-flow protections for mid-market and family-owned borrowers.
Latin America combines resilient corporate fundamentals with a persistent, perception-based risk premium that often keeps spreads elevated. Corporate leverage2 in the Latin American High Yield market is around 2.8x net debt to EBITDA versus 5.5x in U.S. High Yield, interest coverage2 5.4x versus 4.5x, and long-term default rates³ in the hard currency public credit market are less than two-thirds of global high yield, yet spreads⁴ remain approximately 100–150 basis points wider than US High Yield credits. In addition, sovereign rating ceilings (the so-called “zip code effect”) can constrain issuers domiciled in high-yield sovereigns, contributing to wider spreads even when company-level fundamentals would support higher ratings elsewhere.
While the opportunity set is long-standing, the institutional category remains nascent. Private credit represents less than 1% of a roughly US$2.3 trillion Latin American corporate credit system, reflecting limited institutional allocation and a small number of scaled, dedicated managers. Traditional channels have not closed the financing gap: bank lending to corporates has been broadly flat for more than a decade, and regional corporate bond markets have generated cumulative net negative financing of approximately US$175 billion5 since 2017, as maturities and buybacks have exceeded new issuance. The result is a structural imbalance: constrained supply of reliable longer-tenor capital alongside persistent demand for US dollar-linked financing. That dynamic can sustain a scarcity premium for well-structured bilateral private credit, particularly in the mid-market.
Javier Montero, Partner and Head of Private Credit at Patria, said:
“Latin America is a large, under-levered corporate credit market where reliable capital remains scarce. That scarcity, combined with a persistent regional risk premium, can keep spreads elevated even when fundamentals are resilient, supporting attractive yield without relying on higher leverage. Patria is built to convert this structural inefficiency into repeatable alpha through proprietary origination at scale, structuring-first underwriting, and a long-memory information edge under one risk framework.”
Patria’s credit platform integrates public credit research, private credit underwriting and structured-credit analytics under a unified risk framework, supported by deep on-the-ground teams across six markets.
Patria has also strengthened its credit franchise through the acquisition of a 51% stake in Brazil’s Solis Investimentos. The transaction adds approximately US$3.5 billion in fee-earning AUM and expands Patria’s capabilities in asset-backed and structured credit, including securitization and ongoing monitoring, further reinforcing Patria’s ability to originate, structure, and distribute credit exposure at scale while maintaining underwriting discipline.
The next private credit vehicle is expected to continue Patria’s focus on senior secured corporate lending and asset-backed structures, with strong collateral packages, cash-flow protections and covenant-heavy documentation designed to prioritize downside protection, governance and predictable cash-flow generation.
About Patria Investments
Patria is a global middle market alternative asset manager, specializing in key resilient and growth sectors. We are the leading asset manager in Latin America and have a strong presence in Europe through our extensive network of General Partners relationships. Our on-the-ground presence combines investment leaders, sector experts, company managers, and strategic relationships, allowing us to identify compelling investment opportunities accessible only to those with local proficiency. With 37 years of experience and over US$60.1billion in assets under management, we consistently deliver attractive returns through long-term investments, while promoting inclusive and sustainable development in the regions where we operate. Further information is available at www.patria.com.
*Pro-Forma aggregate AUM includes 1 acquisition announced, WP Global Partners, and 2 completed, Solis and RBR by February 3 2026
Moneda Patria Investments internal reports, JP Morgan, McKinsey Global Private Credit Markets Reports.
Source: Financial Statements of Companies, Capital IQ, Bloomberg and Moody’s High-Yield Covenant Database. Note: LatAm HY: Output based on the J.P. Morgan CEMBI Broad Div. LatAm HY Index. US HY: BBG Barclays US High Yield Index. Weighted Leverage and Interest Coverage for LatAm HY are as of March 31, 2025. Weighted Leverage and Interest Coverage for US HY are as of June 30, 2025.
Moody’s: Latin America and Caribbean corporate default and recovery rates, 1990 to 2021
Source: Bloomberg. LatAm Hy: JPMorgan CEMBI Broad Diversifies Latin HY Index; US HY: BBG Barclays US High Yield Index. Data from 31 December 2005 to 31 December 2025.
Bond Radar, Goldman Sachs, Bloomberg L.P, Brazil Central Bank, CMF, among others. Net Financing 2017 – 2023 = Σ (Bond Issuances (-) Amortizations (-) Tender/calls/buybacks (-) Coupons paid).
