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Hedge Clippings | 13 November 2026 Private credit after Bathla Last Friday, Hedge Clippings asked how much further the Reserve Bank could squeeze the economy after its fifth rate rise of the year. This week's housing figures show how much borrowers had already pulled back before that latest rise. But first, a question closer to home. If a loan in your private credit fund gets into trouble, how long will it take before you find out? ASIC's second major review of private credit, released on Tuesday, looked at 24 retail and wholesale funds managing a combined $18 billion. A year after their first report, ASIC is still finding opaque fees, poor disclosure and shortcomings in the way funds are sold and conflicts are managed. Where a fund lends through several entities or invests through other funds, investors can struggle to see who ultimately owes the money. And the management fee on the front page tells you only so much if the manager or a related entity also earns fees from the borrower. On Monday, ASIC issued interim stop orders against two Angas Securities funds. Its concerns related to disclosure of Angas Securities' financial position in both funds and exposure to Bathla in one of them, the Angas Prime Income Fund. ASIC also announced a separate investigation into Bathla's collapse. For investors, the practical question is what a manager tells them between one monthly report and the next, particularly when a borrower misses a payment, asks for an extension or can no longer refinance. As we've previously stated, not all private credit is the same. FundMonitors has recently split Private Credit funds into three peer groups based on the underlying asset being financed either Property Development, Corporate, or for those with a mixture of underlying, Diversified Private Credit. A loan to a property developer may depend on the project being completed and sold. A loan to an established business may depend on whether it generates enough cash to service the debt. Both can pay investors a regular income, and both can go wrong in different ways. We're grouping funds by what they lend to so that investors can make more meaningful comparisons. However, within each group, the investor still needs to know who reviews the valuations, how much is ultimately lent to the same borrower or group, and what happens when more investors want their money back than the fund can readily pay. A regular distribution can make a fund feel predictable. It's worth asking how much of that distribution comes from interest actually collected, how much interest has been added to loan balances, and who decides when those balances need to be marked down. The answers matter even to investors who are happy to leave their money in the fund. A valuation affects the price at which everyone else comes in or goes out. Cheaper houses, dearer mortgages If Jim Chalmers was looking for evidence that property investors are pulling back, Wednesday's ABS figures provided it. The value of new investor housing loan commitments fell 32.3% in the September quarter. New owner-occupier lending fell 5.3%, and first-home buyer lending fell 8.0%. Those figures cover the three months to September, before the RBA lifted the cash rate to 4.85% last week. NAB now puts combined capital-city dwelling values 8.1% below their March peak and is forecasting a 14% fall from peak to trough, up from its previous estimate of 11%. The government can point to lower prices and less competition from investors as good news for first-home buyers and housing affordability. For anyone trying to get a loan, though, the price on the listing is only half the calculation. A lower purchase price helps with the deposit. Higher mortgage rates can still put the repayments beyond reach. And the September figures capture a period of both higher rates and housing tax changes, which makes it hard to say how much of the fall belongs to either. That covers first homebuyers. However, those with an existing mortgage face a different issue depending how long they've been in the market, and how much they owe. Falling property prices, particularly if they have fallen into negative equity will cause both the borrower and the lender some level of nervousness. For those existing owners without mortgage stress, falling property prices are still unlikely to leave them happier than they were. Albanese and Chalmers are probably feeling the same. There's little sign of relief heading into Christmas. The Westpac-Melbourne Institute consumer sentiment index fell to 78.2, the lowest in four years, and more than 70% of respondents expected mortgage rates to rise further over the next year. NAB's business survey found weaker forward orders, with input costs still rising faster than selling prices. Put yourself in the shoes of a retailer who ordered stock for Christmas. Customers are watching their budgets, suppliers are still putting prices up, and there's only so much of the difference you can absorb. The political temptation will be to take credit for lower house prices and leave the higher mortgage repayments to Michele Bullock. For a household deciding whether it can afford to buy, both numbers go into the same spreadsheet. The RBA still expects inflation to take until mid-2028 to return to the midpoint of their 2-3% target. Next Tuesday we'll get the minutes of their recent split decision meeting, then wages on Wednesday and jobs on Thursday. The minutes will tell us more about how the Board weighed the risks when it raised rates, but not who voted which way. The jobs figures may tell us more about what it has to weigh next time. If unemployment starts rising faster while inflation stays stubborn, the RBA's next decision in December will be an uncomfortable one. |
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News | Insights Six private credit checks advisers should not skip | Princeton Financial Services How APRA Built an Unquestionably Strong Australian Banking System October 2026 Performance News |
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