> ## Content Index
> Fetch the complete content index at: https://www.benchmarkanalytics.com.au/llms.txt
> Use this file to discover other available public pages before exploring further.

# Private credit in Australia: What is going on?
- URL: https://www.benchmarkanalytics.com.au/private-credit-australia-explainer/
- Published: 2026-09-23T05:00:58.000Z
- Updated: 2026-09-23T05:00:57.000Z
- Description: Private credit is providing billions in finance outside Australia's banking system. Following a major property-developer collapse, ASIC is escalating its response to weaknesses in fund governance, valuations and risk management.
- Author: Nick Hossack
- Tags: ASIC, Private Credit, Superannuation, Non-bank Lending, #banking

Private credit is attracting unprecedented regulatory attention following the collapse of property developer Bathla and a fresh warning from ASIC that the industry should prepare for enforcement action.

But what exactly is private credit, how large is it, and what has gone wrong?

## What is private credit?

Private credit involves investors lending money to businesses outside conventional bank lending and public bond markets. Investment funds pool capital from institutions, superannuation funds and individual investors, then lend directly to businesses, property developers and other borrowers.

Investors receive interest income but ultimately bear the risk of loan losses. Private credit can finance projects banks are unwilling or unable to support, particularly property development and more complex corporate lending.

## How big is the sector?

ASIC puts Australian private credit at approximately $200 billion in assets under management, with roughly half exposed to real estate.

However, the RBA's narrower estimate is approximately $50 billion in Australian private-credit loans outstanding at December 2025\. The estimates have different coverage and significant data gaps.

Despite its rapid growth, private credit represents less than 2% of Australian financial-system assets, according to the RBA. Its aggregate systemic importance therefore remains relatively limited.

## What has gone wrong?

ASIC's review of 28 private-credit funds exposed substantial weaknesses.

Only four publicly disclosed the interest rates charged to borrowers. Just 12 had detailed written credit, impairment and default-management policies. Only two of the eight wholesale funds undertook liquidity stress testing.

ASIC also identified conflicts of interest, inconsistent definitions of loan defaults and inadequate independence in valuations.

These problems matter particularly when funds offer investors regular withdrawals while holding property-development loans that cannot be readily sold.

Australia's considerable exposure to property development adds another vulnerability. Higher construction costs, delayed projects and falling collateral values can quickly turn apparently performing loans into troubled assets.

The recent collapse of Bathla, which reportedly owed approximately $3 billion to more than 40 lenders, illustrates those risks.

## What is being done?

ASIC has introduced ten principles covering governance, transparency, valuations, fees and risk management. It has issued stop orders against some funds and commenced enforcement investigations.

Its latest surveillance covers retail and wholesale funds, with particular attention to valuations, redemption pressures and deteriorating credit.

Superannuation trustees are also being pressed to scrutinise external managers rather than simply accepting their valuations.

The central challenge is ensuring private credit remains an additional source of productive finance without exposing investors to poorly disclosed risks.

The RBA currently sees limited evidence of widespread deterioration in Australian lending standards. ASIC's concern is that weaknesses in individual funds could become substantially more damaging during an economic downturn.

Private credit under scrutiny

Australia's market and what ASIC found 

| $200bn Broad estimate of assets under management | $50bn RBA estimate of loans outstanding |
| ------------------------------------------------ | --------------------------------------- |

These estimates have different coverage and are not directly comparable. 

| Risk                | ASIC's finding                                                               | Why it matters                                          |
| ------------------- | ---------------------------------------------------------------------------- | ------------------------------------------------------- |
| **Disclosure**      | **4 of 28** disclosed borrower interest rates                                | Investors cannot properly assess risk or fees.          |
| **Credit controls** | **12 of 28** had detailed credit or impairment/default policies              | Poor loans may not be identified promptly.              |
| **Liquidity**       | **2 of 8** wholesale funds stress-tested liquidity                           | Withdrawals may exceed readily available cash.          |
| **Valuations**      | Most lacked effective independence in loan monitoring or valuation oversight | Conflicts may affect asset values and reported returns. |

**What happens next?**  
ASIC's response includes ten guiding principles, stop orders, further surveillance, additional data collection and enforcement investigations. 

Source: ASIC REP 820 (November 2025); RBA (February–March 2026). Findings relate to ASIC's reviewed sample, not every Australian fund.