Australia's Metrics Freezes Some Fund Redemptions in Sign of Private Credit Market Stress

Metrics Credit Partners, one of Australia’s biggest private credit firms, has temporarily frozen investor redemptions from some funds and delayed the release of financial reports, providing another sign of growing stress in the country’s non-bank lending sector.

Metrics, which manages around A$40 billion ($28 billion), said on Wednesday that auditor KPMG would not sign off on the full-year accounts of three listed funds before the September 30 reporting deadline. The funds have already been suspended from trading on the Australian Securities Exchange after Metrics disclosed reductions in their asset values.

The affected vehicles are the Metrics Real Estate Multi-Strategy Fund, Metrics Income Opportunities Trust and Metrics Master Income Trust. Metrics said redemptions from unlisted underlying funds that feed into the listed vehicles had also been temporarily suspended.

The decision follows KPMG’s disagreement with some assumptions used in Metrics’ preliminary financial reports, including the methodology for calculating the fair value of unlisted commercial real estate equity investments. The listed funds remain suspended until audited financial statements are submitted.

The developments have intensified scrutiny of Australia’s private credit industry, which has expanded rapidly in recent years and has significant exposure to the property market. The sector has come under additional pressure following the collapse of property developer Bathla Group, which entered administration in August owing about A$3 billion to roughly 40 lenders. Metrics has said it had no exposure to Bathla.

Australia’s corporate regulator, the Australian Securities and Investments Commission, said it was closely monitoring developments across the private credit sector. ASIC has also warned about unrealistic valuations and poor governance practices, saying firms that fail to meet regulatory standards could face enforcement action.

The stress comes as private credit funds globally face questions about liquidity and asset valuations. In Australia, the combination of higher borrowing costs, a weaker property market and increased investor withdrawal requests has placed additional pressure on funds that invest in less-liquid assets.

Metrics’ latest actions highlight the challenge private credit managers face when investors seek to withdraw money from funds holding assets that cannot easily be sold without affecting valuations. Temporary redemption restrictions can give managers more time to assess portfolios and meet withdrawal requests in an orderly manner.

For investors, attention will now turn to the completion of Metrics’ audits, the final valuations of its funds and whether redemption restrictions spread to other parts of Australia’s private credit market. The developments could also increase regulatory scrutiny of how private credit firms value assets and manage liquidity during periods of market stress.