Full Breakdown
ASIC Flags Growing Risks in Australia’s Private-Credit Market
7/20/2026, 12:11:54 PM
Expanding Exposure and Property Concentration
Australia’s private-credit market has ballooned to roughly A$250 billion, up from about A$35 billion a decade ago. More than half of these loans are tied to property development and construction, sectors the regulator says it is monitoring closely. ASIC commissioner Simone Constant warned that an overvalued property market combined with emerging lending practices could create “gaps,” leading to liquidity strains, lagging data and heightened default risk. The regulator fears that a property-market downturn could trigger a broader private-credit shock that would affect ordinary investors and superannuation members.
Global Pressures Amplify Domestic Concerns
Stress in overseas private-credit markets is feeding Australian worries. U.S. firm Blue Owl restricted investor withdrawals after its software-focused funds suffered heavy redemptions, and its shares have fallen 40 % this year. U.S. auto lender Tricolor Holdings and UK mortgage lender Market Financial Solutions have already collapsed. The Bank of England, led by Governor Andrew Bailey, launched a scenario exercise in December to assess private-market risks, with findings due in early 2027. These developments underscore the “size and breadth” of private credit that ASIC says has not been tested in a downturn.
Regulator and Industry Perspectives
ASIC emphasizes the need for confidence in private credit, noting that many Australians are exposed through superannuation. Industry voices echo the regulator’s caution. Nick Kelly, portfolio manager at Wilson Asset Management, said institutional investors and super funds have poured capital into an asset class that may be less safe than perceived. Brett Craig, director of private credit at Aura Group, described property-linked lending as profitable only for those able to intervene when borrowers default, warning that the opposite scenario can lead to significant losses.
Critics Warn of Systemic Fallout
Independent analysts highlight the potential for a feedback loop. Dan Rasmussen, managing partner at Verdad Adviser, warned that with US$100 billion of loans outstanding but only US$50 billion of new fundraising, defaults could accelerate, amplifying market panic.
Verbatim Quotes
- “If the Australian property is overvalued, and we see those practices emerging and it happens at scale, you get gaps,” — Simone Constant, ASIC Commissioner
- “We're going to see more and more pain,” — Dan Rasmussen, Verdad Adviser managing partner
- “The institutional investors, superannuation funds and others have piled into this asset class," Wilson Asset Management portfolio manager Nick Kelly said.” — Nick Kelly, Wilson Asset Management portfolio manager
- “Lending against property construction transactions is a good way to make money if you know what you're doing and you can actually step in should the borrower default,” — Brett Craig, Aura Group director of private credit
- “Bank of England governor Andrew Bailey told Bloomberg in May: "There are some signs of strain in the market.” — Andrew Bailey, Governor, Bank of England
