ASIC Warns of 'First Significant Cracks' in Australian Private Credit

The Australian Securities and Investments Commission (ASIC) has warned that private credit is facing its 'first significant cracks' due to the collapse of several large borrowers and the limiting of redemptions at several major funds.

Most adult Australians have exposure to private credit through their superannuation funds, and ASIC has indicated it's attuned to this. ASIC Chair Sarah Court said that private credit is a lightly regulated sector compared to the banking industry, but added, 'This really matters, and that is why we've been talking about it for such a long time.'

The Reserve Bank of Australia (RBA) is also keeping a watchful eye on developments in this opaque debt market. RBA Governor Michele Bullock said, 'People don't know where the leverage is,' and added, 'They don't know who's exposed.'

A recent move by major NSW property developer Bathla to appoint administrators has raised eyebrows among industry officials. The company had large lines of private credit, with $3.2 billion in liabilities owed mostly to private credit funds as at June 30 last year.