Structure First: Private credit in Tier 2/3 without the yield trap In frontier and complex markets, the edge is often cash control, security realism, and enforceability, not headline coupon.
Two loans offer 18–22% coupons. One is backed by offshore collections and a monitored cash waterfall. The other has strong collateral “on paper” but no practical enforcement path.
The first survives a shock. The second becomes litigation theatre.
Enforcement is the hidden variable. Contract enforcement time and cost differ materially across jurisdictions; Doing Business is directional but helpful for framing friction. FX controls and transfer approvals are path-dependent; AREAER is a starting map of restrictions, but deals need local counsel and bank behavior checks. Arbitration clauses matter when local courts stall; NY Convention sets a recognition framework.
Security packages that often work better:
Security that is often weaker than it looks:
Collections → taxes and payroll → operating capex → debt service reserve top-up → interest → principal → distributions.
Most relevant to trade finance, invoice discounting, asset-backed lending, and structured SME credit.
Term Sheet Red Flags (sidebar)
“The coupon is not the return if you cannot control cash.”
Key datapoints
