UBP thinks there will be a growth in asset-backed financing (ABF) within private debt. ABF refers to financing secured by physical or financial assets. Physical assets may include capital equipment, machinery, and property. Financial assets may include receivables, student loans, credit cards and intellectual property. ABF will encompass transition infrastructure and capex, including solar energy generation and battery storage, for example.

This growth will be driven by multiple factors, according to UBP, including an outgrowth of the banking system, exposure to a diversified pool of borrowers and attractive repayment profiles. Asset-backed financing is secured by physical or financial assets and therefore potentially provides a better risk profile.

UBP thinks that attractive risk-return will be found in residential real estate and asset-backed financing, two sectors which offer the combination of returns, diversification and resilience.