Southeast Asia’s souring loans are becoming unpalatable even for some distressed-asset funds.

SC Lowy, an independent fixed-income firm founded by former Deutsche Bank AG employees, says secondary loan trading volumes are at the thinnest in a decade even with discounts near 20 percent for borrowers including Singapore-listed Noble Group Ltd. and Mercator Lines Singapore Ltd. The primary market is also receding after Southeast Asia syndicated loan volumes slumped 39 percent to a five-year low in 2015.

“The secondary loans market, in 2015 and continuing into this year, has been totally dead,” said Michel Lowy, co-founder and chief executive officer of SC Lowy, which focuses on loans, bonds, trade claims and special situations. “It’s the lowest volume I have come across in over 10 years, mainly because there’s been a massive gap between the buyers’ and the sellers’ expectations.”

Investors that buy loans, or portions of them, in the secondary trading market are being more discerning as some of Southeast Asia’s vulnerable borrowers endure a multi-year slump in commodity and shipping prices. China’s slowest economic growth in a quarter century, the lowest shipping rates in three decades and crude below $30 a barrel have pushed Asia’s bond risk to the highest in almost four months, based on credit-default swap prices.