Optimizing Credit Risk Management: Modelling Techniques for Asset-Based Lending

In the rapidly evolving private credit landscape, Asset-Based Lending (ABL) has emerged as a powerful tool for credit fund managers and institutional investors seeking to diversify their portfolios and mitigate risk. With ABL’s unique structure—backed by collateral such as inventory or real estate—investors can structure transactions to achieve high recovery rates and attractive, uncorrelated risk-adjusted returns. With the ABL market projected to grow to $7.7 trillion by 2027, the opportunities for significant returns are substantial. However, these opportunities depend on careful structuring and monitoring of risk across diverse asset types and borrower profiles.

Optimizing these benefits requires precise risk management and robust modeling techniques. This report, Optimizing Credit Risk Management: Modeling Techniques for Asset-Based Lending, explores advanced strategies for assessing ABL risks. It offers insights into how internal credit models and standardized frameworks can enhance investment decision-making, support regulatory compliance, and meet investor mandates.

Whether you're a credit general partner (GP), a limited partner (LP), or a co-investor, understanding how ABL can protect against volatility and improve recovery prospects is essential. Read the report to discover how S&P Global Market Intelligence’s Credit Assessment Scorecards can support ABL workflows and enhance private credit portfolios with, expert-judgement and data-driven insights.