Ares Management Corp. has raised concerns about the growing stress in Australia’s private credit sector due to rising interest rates. The country’s central bank has already increased rates four times this year, bringing them to 4.6%, with more hikes potentially on the horizon to curb inflation.
Peter Graf, partner and head of Asia direct lending at Ares, highlighted the added strain on the private debt market during the Citi Australia & New Zealand Investment Conference in Sydney on Tuesday. He emphasized that higher borrowing costs are exacerbating challenges in Australia’s struggling real estate market, which has significant exposure to private credit.
Ares, one of the world’s largest private credit managers, warned that the combination of elevated interest rates and a weak real estate sector could create further difficulties for private credit investors in Australia.