The exclusive bank credit club

Although commercial rates have come down and banks are showing strength under Basel III, the credit party is not for everyone. Large companies improved their balance sheets, reduced their financial burden and got back on track.

Small and medium-sized enterprises (SMEs), on the other hand, remain trapped in the hangover of the pandemic. Many are still dragging the effects of FOGAPE loans and, as the Central Bank points out in its Financial Stability Report (IEF), their indicators show no clear signs of recovery.

The residential real estate sector is also still in intensive care: sales are falling, the stock of stock of finished homes is increasing, and the available inventory is now close to two years old. Although prices have risen slightly, what is behind it is not recovery, but rather pressure to liquidate before demand collapses completely.

And yes, mortgage rates went down, but they are still high: 4.4% real in March 2025far from the minimum of 2% pre-pandemic. With weak demand and scarce financing, the sector is on the brink of the abyss..

The door that opens when the bank closes it

This is where private debt comes in. Not as the "usual alternative lifeline" -that discourse is already boring-, but as a solution that adapts to more diverse business contexts.

Banks, in their systemic role, operate under strict regulatory frameworks, with a focus on liquidity, standardized solvency and traditional guarantees. Understandably, that's fine: that's its role. But it also means that many companies - even good ones - are left out.

Because yes, there are beaten SMEs. But there are also well-run businesses, with solid products and real demand, that simply do not fit the banking mold. Not for lack of merit, but for lack of space.

That is where private debt comes in: with the capacity to look differently. Not to take blind risks or compete with banks, but to apply equally rigorous analysis, but with greater flexibility. To understand different models, non-linear cash flows or non-conventional guarantees.

Diversification is urgent

The Chilean financial ecosystem needs more than resilience: it needs diversity. While bank lending is concentrated - as it should be - in conservative profiles, there is a growing space for institutional investors and funds to identify value where institutional investors and funds to identify value where few are looking today. where few are looking today.

This is not financial philanthropy. It is vision.

Because profitability does not live only in the "investment grade". Sometimes it's right next door, waiting for someone to cross the street.

DISCLAIMER

Vincent Dourthé, CFA

Portfolio Manager Private Debt Fynsa AGF