5 - Private credit crisis hits Australia

0:00Private Credit Crisis hits Australia. By Elisa Barwick. Administrators taking over Barthler Group last week looked down the barrel of a huge financial hole. But if contagion spreads, the entire nation could be staring into the abyss. The private credit sector in Australia is estimated at $200 billion by the Financial Services Council. AFR reported the 27th of August, and around half of that is invested in real estate. With the real estate Ponzi scheme stuttering, the private credit bubble, significantly built on property development, is at real risk. Tax changes in the last budget have interrupted, just slightly thus far, the rising property values, driven by new investors pouring in, on which they depend. Private credit funds collect investors' money into a pool to loan out, especially in sectors where banks are low to lend. The market is supported by structural demand, Moody's claims, but admits it has expanded as banks wound back lending in commercial real estate

1:03and other higher-risk lending segments, AFR reported. S&P has warned, the private credit sector will come under pressure, adding that a significant increase in property developer defaults would exacerbate the risk. Tip of the iceberg. Western Sydney home builder Barthler owes $3.6 billion to private lenders, and citing rising costs and changing market conditions as key factors, the owners opted to place the group into voluntary administration on 25 August. Administrators scrambled to secure the $20 million required to keep construction going, but have been hampered by the scale and complexity of operations, according to lawyers. While receivers are indicating there is no money to pay wages or suppliers, and the developer will likely be declared insolvent within the week. The AFR of the 31st of August said if that occurs, quote, private credit funds will have to secure alternative builders to complete the half-finished projects. End quote. In October last year,

2:04JP Morgan CEO Jamie Dimmon warned about private credit disasters proliferating like cockroaches, due to lack underwriting standards, refer to alert 12 November 2025. Numerous US funds have halted withdrawals this year from a BlackRock fund to Blue Owl capital, with large sums pulled from many others, refer to alert 11 March 2026. Some of the largest funds in the country are affected, including CVS laying capital partners, which restricted withdrawals from two of its funds, and Centuria Capital Fund Centuria Base, which, with an exposure of around $200 million, has frozen $670 million of funds. 360 Capital paused stock market trading of its securities, Balmain Private, Trilogy, Lattrobe Financial, Credit Connect and Sydneywide Mortgage Management are exposed. Ray White Capital has an exposure of around $200 million across various developments.

3:05Hong Kong-based PAG has restricted withdrawals. Spill over-impacted funds not directly exposed can be seen at MA Financial's $2.3 billion secured real estate income fund, which is restricting redemptions to 1% per month, due to higher than normal withdraw requests. MA Financial is one of the largest private credit outfits, with half of its $15 billion under management sunk into private credit, AFR reported. Additionally, Merrick's Capital has cancelled order-laid redemption requests, due to low liquidity more than once over the last year. Where are the regulators? The Barthler Crisis is the first real test of private credit markets for Australia, said Asick Chair's Sera Court at the 26th of August's speaking engagement. Specifying, these are the first significant cracks, but its early days yet. As investment was pouring into private credit markets in November 2025, then Asick Chair Joe Longo issued a report, warning about the sectors in adequate governance,

4:09reporting, disclosure, valuation practices and more, refer to alert, the 19th of November, 2025. But Longo, who has a history of being soft on white collar crime, merely threatened future action if noncompliance continued. And it was only on the 26th of August, AFR reported, that the Financial Services Council, an industry body which represents its fund manager members, announced it would meet to discuss imposing higher expectations on funds from July next year. This is the height of negligence, given what is at stake, including billions of dollars of exposure of Australian super funds, according to the 30th of August Australian. Investment research and Morningstar reports, that private credit is the fastest growing segment of super funds private asset allocations. Among others, superannuation funds have made loans to Centuria and PAG, and many funds invest in private credit offshore, including in the USA and Europe.