Does a slowing economy increase the risk of loan defaults in private debt?

Well-run private debt funds use rigorous scenario testing and real-time monitoring to mitigate risks. Historical net write-offs by banks peaked at just 0.68% during the GFC and were 0.04% in September 2024, demonstrating strong resilience across economic cycles.

Does a loan default always result in a credit loss?

No. Private debt investors are protected by their seniority in the capital structure. Senior debt holders get repaid first, before subordinated debt, preferred equity, and common shareholders. Covenants and controls act as early warning signals allowing lenders to engage with borrowers to mitigate financial loss.

Are all private debt managers the same?

No. Private debt managers differ significantly in scale, credit skills, and experience. Quality managers need sizable assets under management, bank-level credit skills, extensive networks, and the ability to directly originate and diversify loans across borrowers to achieve optimal outcomes.

Does commercial real estate debt put capital at risk in a property downturn?

Property owners face greater risk than lenders. With typical loan-to-value ratios of 60%, owners' equity acts as a buffer. Even if property values fall significantly, lenders can compel borrowers to restore their position or pursue asset sales to maximize recovery without necessarily incurring losses.

Are non-bank lenders lenders of last resort?

No. Competent private debt managers lend to quality companies and often compete with banks or work alongside them in lending syndicates. Post-GFC regulations requiring banks to hold more capital have created financing gaps that private debt fills for established companies with sound fundamentals.

Climate Bonds Initiative welcomes Metrics Credit Partners to the Climate Bonds Partnership Programme

Climate Bonds Initiative (CBI) welcomes Metrics Credit Partners (Metrics) to the Climate Bonds Partnership Programme.

Metrics is the first non-bank asset manager in Australia to join the Climate Bonds Partnership Programme, taking its place alongside groups including the big four banks, the Green Buildings Council of Australia, and the Clean Energy Finance Corporation.

Metrics provides private credit and investment to the Australian and New Zealand business and commercial property sectors through a suite of listed and unlisted funds. Since being founded in 2011 it has provided more than $15 billion to borrowers across multiple industry sectors.

As one of the largest providers of private credit in Australia, Metrics actively promotes the development of the local capital markets and long-term, sustainable business practices to address the challenges of climate change.

Metrics is committed to leading the development of a green and sustainable finance market in Australia and recognises that playing its part in the achievement of the UN Sustainable Development Goals and contributing to a better future will involve collaboration with similarly committed organisations.

In partnering with the CBI, Metrics endorses its aim of mobilising global capital for climate change solutions. In particular, Metrics supports CBI’s work on the development of the Climate Bonds Standard to help investors identify investments that are consistent with the goal of the Paris Climate Agreement to limit warming to under 2 degrees Celsius.

The partnership between CBI and Metrics will support the redirection of capital towards that goal by promoting green loan opportunities in the Australian market as borrowers participate in Australia’s transition to a low-carbon economy.

The Climate Bonds Standard has been widely applied by issuers of green bonds and borrowers of green loans in Australia to finance low carbon buildings, transport, and solar and wind energy.

As part of its continuing commitment to sustainable finance, Metrics has refreshed its Environmental, Social and Governance (ESG) policy and is in the process of developing new products and capabilities that will support borrowers and investors in meeting their sustainability goals.

Andrew Lockhart, managing partner and co-founder of Metrics:
“As the first non-bank asset manager in Australia to become a Climate Bonds Partner, Metrics is determined to play a leading role in promoting and assisting with the transition to a low carbon economy.”

“Metrics is committed to developing financial practices and products that will provide our stakeholders with the means to achieve that transition in a just and timely manner. We are delighted to work with the Climate Bonds Initiative to expand the opportunities for green finance in Australia.”

Sean Kidney, CEO, Climate Bonds Initiative:
“It’s great to see a shift in Australia’s commitment towards sustainable finance. Together, with the help of asset managers like Metrics, championing sustainability in private markets, we can be more confident in our transition to a low carbon and climate resilient economy.”

14 October 2021

For further coverage on this announcement, see below:Financial Standard, 14 October 2021 – Metrics Credit Partners joins climate partnership

Investor Daily, 14 October 2021 – Climate Bonds Initiative partners with first Australian non-bank asset manager

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