(31 August 2026 – Australia) The Australian A$200 billion private credit market is under scrutiny as major funds cap redemptions in the wake of property developer Bathla’s collapse.
As regulatory settings tightened at the end of last year resulting in heightened caution by corporates, the first major signs of strain are appearing in the sector.
The Australian private credit sector, heavily exposed to property development, is facing its moment of stress as souring property loans increase the risk of losses while investors are rushing to redeem capital from funds that have thus far delivered sound performance, James Eyers reports for The AFR.
Private credit firms are facing their first real test after several private credit lenders were caught up in the collapse of Sydney property developer Bathla, which has more than A$3.5 billion in debt.
While Apollo is offering investors daily valuations for its private credit funds and BofA has positioned itself more aggressively against non-bank competitors with US$25 billion of lending dedicated to private credit, HSBC has withdrawn from higher-risk private credit lending in the UK, notifying clients it will not renew facilities where returns were deemed insufficient to justify the risk.
“Unfortunately, what we’re seeing at the moment, and it’s early days with no doubt more information to come out in the weeks and months to come, is the first significant cracks” said ASIC Chairwoman, Sarah Court.
“When you see one cockroach, there are probably more” JPMorgan CEO Jamie Dimon remarked earlier this year in relation to growing strain in the global private credit sector.