Key Takeaways
- • Metrics Credit Partners, which manages around A$40 billion ($28 billion), has frozen investor redemptions from some unlisted funds and delayed release of financial reports, according to Reuters.
- • KPMG declined to sign off on full-year accounts for three listed Metrics funds before the September 30 lodgement deadline, after Metrics wrote down their asset values.
- • The three listed funds, Metrics Real Estate Multi-Strategy Fund, Metrics Income Opportunities Trust and Metrics Master Income Trust, have been suspended from trading since Monday.
- • Perpetual, responsible entity for two of the trusts, suspended distribution reinvestment plans, and S&P Global placed four wholesale Metrics funds on credit watch.
- • ASIC is closely monitoring the private credit sector and has warned of unrealistic valuations and poor governance, with enforcement action threatened for non-compliant firms.
Summary
Metrics Credit Partners, one of Australia's largest private credit firms, has frozen investor redemptions from some funds and delayed the release of financial reports, according to Reuters, in the latest sign of stress in Australia's non-bank lending sector. The firm said on Wednesday that its auditor, KPMG, would not sign off on full-year accounts for three listed funds before the September 30 lodgement deadline.
The three funds, the Metrics Real Estate Multi-Strategy Fund, Metrics Income Opportunities Trust and Metrics Master Income Trust, have been suspended from trading on the Australian Securities Exchange since Monday, after Metrics disclosed it had written down their asset values. KPMG disagreed with assumptions in the preliminary financial reports, including how fair value was calculated for unlisted commercial real estate equity investments. Metrics said redemptions of units in its unlisted underlying funds feeding the listed vehicles had been suspended temporarily, and the listed funds will remain suspended until audited reports are submitted.
Sentiment toward private credit in Australia has become fragile following the collapse of property developer Bathla Group, which owed A$3 billion to about 40 lenders when it entered administration in August. Most of those lenders were private credit firms, some of which have also suspended redemptions. Metrics said earlier this week it had no exposure to Bathla.
Perpetual, the responsible entity for the Metrics Master Income Trust and Metrics Income Opportunities Trust, said distribution reinvestment plans for the two funds would be suspended, citing current market circumstances and the temporary suspension being in the best interests of unitholders. S&P Global placed four separate wholesale Metrics funds on credit watch to monitor actions across the portfolio.
The Australian Securities and Investments Commission said it was closely monitoring the private credit sector in light of recent market upheaval. A spokesperson said firms restricting or deferring redemptions should ensure decisions are made in investors' best interests and treat exiting and remaining investors fairly. ASIC had warned the previous week of unrealistic valuations and poor governance in the industry, and said firms failing its standards should prepare for enforcement action. Australia's private credit market has expanded rapidly and is heavily exposed to a property market in downturn due to interest rate hikes and housing tax changes.
The three funds, the Metrics Real Estate Multi-Strategy Fund, Metrics Income Opportunities Trust and Metrics Master Income Trust, have been suspended from trading on the Australian Securities Exchange since Monday, after Metrics disclosed it had written down their asset values. KPMG disagreed with assumptions in the preliminary financial reports, including how fair value was calculated for unlisted commercial real estate equity investments. Metrics said redemptions of units in its unlisted underlying funds feeding the listed vehicles had been suspended temporarily, and the listed funds will remain suspended until audited reports are submitted.
Sentiment toward private credit in Australia has become fragile following the collapse of property developer Bathla Group, which owed A$3 billion to about 40 lenders when it entered administration in August. Most of those lenders were private credit firms, some of which have also suspended redemptions. Metrics said earlier this week it had no exposure to Bathla.
Perpetual, the responsible entity for the Metrics Master Income Trust and Metrics Income Opportunities Trust, said distribution reinvestment plans for the two funds would be suspended, citing current market circumstances and the temporary suspension being in the best interests of unitholders. S&P Global placed four separate wholesale Metrics funds on credit watch to monitor actions across the portfolio.
The Australian Securities and Investments Commission said it was closely monitoring the private credit sector in light of recent market upheaval. A spokesperson said firms restricting or deferring redemptions should ensure decisions are made in investors' best interests and treat exiting and remaining investors fairly. ASIC had warned the previous week of unrealistic valuations and poor governance in the industry, and said firms failing its standards should prepare for enforcement action. Australia's private credit market has expanded rapidly and is heavily exposed to a property market in downturn due to interest rate hikes and housing tax changes.
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