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.

Metrics appointed Agent and Security Trustee for Herron Todd White Transaction

Earlier this year, Metrics Agency and Security Trustee business was appointed to the role of Facility Agent and Security Trustee to support Quadrant Private Equity’s investment in Herron Todd White.

Herron Todd White is one of the largest independent property valuation and advisory groups in Australia.

We were pleased to have assisted Quadrant and their financiers in the successful close and ongoing management of this transaction.

About Metrics Facility Agency and Security Trustee Services

Our specialised agency and security trustee team deliver seamless administration, robust security, and timely execution for multi-lender transactions – whether we’re part of a syndicate or acting independently we can assist to provide these services. We offer a single point of contact for borrowers, sponsors, banks and non-bank credit providers, backed by the expertise to tackle complex syndicated lending structures.

13 March 2025

Email us
invest@metrics.com.au

1300 010 311
Mon-Fri 9:00 - 5:30