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Private credit

Private credit
Only fools rush in: Beware the private credit pile on
The spate of novelty-based super funds that came to market a few years back with little more than a catchy moniker was predicated on the realisation that enough crumbs were falling from big super’s table to warrant giving it a red hot crack. After all, the total flow of new money into super annually is huge, and for the year ending September 2025 was around $215.6 billion. When the market realised that these start-up funds had neither the all-important scale nor any real reason to exist – beyond raw opportunism – most of them collapsed within short order. Fast forward to 2025 and the same opportunism is now evident within the private credit market, where new players are piling on, much to the disdain of regulators who have become more vocal in their warnings to yield-seeking Aussie retail investors.ASIC sounds warningsHere in Australia, the regulator, the Australian Securities and Investments Commission (ASIC) has joined a growing chorus of regulators and analysts globally warning about poor quality private credit taking money off gullible mum and dad investors, while also undermining the broader financial system. As a case in point, the number of listed companies on the ASX and other global bourses has fallen in recen
Private credit
New flexible credit income fund targets Aussie investors
New York-headquartered Oakhill Advisers (OHA), the private markets platform of global asset manager T Rowe Price, plans to capitalise on secular tailwinds for private markets - and the challenges thrown up by an uncertain rate environment - by launching a flexible income fund offering Australian investors access to the US$2 trillion global private credit market. By combining OHA’s alternative credit investment expertise with T. Rowe Price’s established distribution network, the new fund – the Flexible Credit Income Fund AUD (OFLEX AUD) – is aiming to expand access for high-net-worth Australian investors to diversify their portfolios with high-quality alternative credit. The fund targets large-cap borrowers with similar financial characteristics to companies in the ASX200, offering exposure to offshore credit markets that can complement domestic holdings. Having historically been reserved for institutions, the Flexible Credit Income Fund AUD (OFLEX AUD) launch marks the first time OHA’s multi-strategy credit approach has been made directly available to Australian wealth clients. This new Australian unit trust is aiming to deliver income by lending primarily to large-cap companies across diverse industries, mainly in th
Private credit
Private credit sector told to lift its game
The Australian Securities and Investments Commission (ASIC) has called on the A$200 billion (US$132 billion) private credit industry to address worrying practices. Australia’s corporate regulator said it was concerned about opaque remuneration and fee structures, related party transactions and governance arrangements, valuation practices and inconsistent use of terms for effective disclosure. “Enhanced standards are needed to lift practices across the sector,” Chair Joe Longo said in a media release. ASIC was releasing its latest report on Australia’s public and private markets, Private Credit in Australia, by infrastructure investment executive Richard Timbs and former banker and chief risk officer Nigel Williams. “'While the report highlights some encouraging practices, it also reveals concerning behaviours that fall short of market expectations and more importantly that are inconsistent with existing financial services law,” Longo said. It comes only days after ASIC blocked $20 billion asset manager, Latrobe Financial Asset Management, from raising money through three fixed interest products. ASIC commissioned the review in response to the rapid growth of the sector in Australia, which in turn represents just
Private credit
Goldman, T. Rowe to offer alternative investments
Goldman Sachs and asset manager T. Rowe Price will begin offering alternative investment products to wealthy clients by the end of the year, with retirement accounts set to follow in 2026, executives told Reuters. The plan builds on a partnership announced earlier this month, under which Goldman will take a stake of up to US$1 billion in T. Rowe. Together, the firms aim to broaden access to private assets, including private credit and private equity, for retail investors. The initiative follows an executive order by President Donald Trump allowing 401(k) retirement accounts to include alternative investments. The order potentially opens access to roughly $9 trillion in retirement savings. T. Rowe Price, which manages $1.6 trillion - around $1 trillion of which is tied to retirement - will oversee the new products. Some products will take the form of target-date funds, which adjust allocations as clients approach retirement. These portfolios will carry a small allocation to alternative assets alongside traditional public and liquid investments, with the alternatives’ share reduced closer to maturity. Other products will cater exclusively to high-net-worth clients, offering diversified portfolios that mix privat
Private credit
Prime US borrowers show rising repayment stress
Financial stress is spreading to some of the most creditworthy United States consumers, according to new data from VantageScore, raising concerns that household finances are weakening more broadly. The credit scoring company reported on Monday that late repayments of more than 90 days surged 109% year-on-year among borrowers in the “superprime” category, those with the highest credit scores. Borrowers in the prime category, typically also considered financially secure, saw a 47% increase in late repayments over the same period. Rikard Bandebo, chief economist at VantageScore, told Reuters that while the absolute level of delinquencies remains relatively low, the trend is troubling. “Even though in absolute terms the increase is modest, it shows that even consumers considered the most credit-healthy are also beginning to see some stress with regard to repayments,” he said. The data also showed a rise in late-stage delinquencies across auto loans and mortgages, sectors where defaults usually occur only under significant financial strain. Early-stage delinquencies, defined as payments overdue by 30 to 59 days, are accelerating fastest in these secured loan categories. “Defaults on secured loans, such as mortgages, typi

Private credit
Asia emerges as growth hub for PE as funding gaps widen
The search for fresh opportunities outside of the more saturated markets of the United States and Europe has led global industry players to refocus on Asia-Pacific, now an emerging global hot-stop for private credit – aka non-bank lending. Since emerging as an investment buzzword three years ago, private credit has continued to garner traction as capital markets have evolved and higher traditional bank lending has widened funding gaps in the lending market. The latest data by PitchBook reveals that private credit assets under management (AUM) in Asia rose from virtually zero in 2000 to $62.3 billion in the first quarter of 2024. Data also reveals that the pace of that expansion has accelerated in recent years, with AUM more than doubling from $34.3 billion in 2017 to over $62 billion last year. According to Nicholas Cheng, head of the private markets group at Standard Chartered Global Private Bank, Asia is arguably emerging as a significant private credit growth hotbed. “The growing funding gap, rapid economic growth, increased sophistication of borrowers, and evolving regulations make it fertile ground,” he said. Due to evolving regulatory landscapes and global investors’ search for higher yields, more capital i
Private credit
Merricks Capital Fund gives PC investors liquidity lesson
There’s lots to like about Australia's fast growing private credit – aka non-bank lender - market, especially the commercial real estate (CRE) sub-sector which accounts for the lion’s share of the Australian market. There are covenants requiring minimum performance and maintenance standards, whilst borrowers pay monthly interest, which should ensure minimum future cash flows are maintained. As a result, yields can be attractive given that they should incorporate what’s called the illiquidity premium. This is simply a fancy way of describing the additional return investors require for holding assets that are not easily tradeable or sold on the market. Trouble is when there’s plenty of liquidity, the illiquidity premium often declines as investors reach for yield. However, as investors in the Regal Partners-backed Merricks Capital Partners Fund recently discovered, letting liquidity take a backseat can come back to bite you.No redemption for nowInvestors in Merrick's $1.2 billion flagship fund were recently advised that redemptions would be delayed because there was no ‘unallocated cash’ to distribute to them. Instead, investors who want to redeem funds will be offered a new class of unit and aren’t forced to back any
Private credit
Non-bank home lending keeps rising, says PEXA
With non-bank lending now revolutionising the way Australians borrow and invest, the country’s reliance on big lenders continues to wane. PEXA’s latest Buyer Deposits report reveals that while major banks continue to dominate, smaller banks now account for a little under half of all new residential mortgages. While major banks, building societies, and credit unions remain the primary lenders of choice, its non-authorised deposit-taking institutions (ADIs) – aka non-banks – that have become an increasingly prevalent part of Australia’s residential home loan landscape. For the uninitiated, non-bank lending refers to loans provided by institutions or individuals other than traditional banks. These typically include private money lenders, private mortgage lenders, and personal loan lenders. Unlike banks, these lenders typically do not accept deposits but focus solely on lending and investment activities. Nowhere is the growth of non-banks or traditional banks more evident than in settlement numbers. While the volume of settlements experienced by major banks grew a modest 3.9% in FY24, the volume of new loans settled by non-banks surged 25.3% year on year.Traditional banks turn more people awayReport data reveals that no
Private credit
Unlock lazy, cheap credit — right at your fingertips
With interest rates again on a downward trajectory, getting a decent return on money invested in the bank or on fixed income is becoming tricky. But with Reserve Bank (RBA) rate cuts reducing the cost of borrowing, now could be a more opportune time to contemplate gearing – putting borrowed money to work to make more money – into property, shares or managed funds. But to ensure that borrowing cheap money isn’t the worst decision you’ll ever make, you need to explore some options and decide whether they’re right for you. Gearing is a risky businessFirst the tough love: Gearing is by its nature a risky business. If the value of the investment nosedives, a geared investment will suffer a greater loss than an investment not encumbered by a loan. For example, if an investment value falls by 20%, an unencumbered $10,000 will reduce to $8000. However, factor in the nasty impact of leverage, and a geared $20,000 will decline to $16,000, reducing the original $10,000 to $6000 less the borrowing cost. Still like the idea of gearing, but have no appetite for the risks associated with margin calls that come with borrowing from a bank or broker? ‘One-click’ solutionWhy not consider a handful of financial providers that have