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 Facility Agent and Security Trustee for Quadrant Private Equity’s $130m TSA investment

Metrics have recently been appointed to the role of Facility Agent and Security Trustee on the business’ syndicated debt facilities, used to support Quadrant Private Equity’s (QPE) investment in TSA Management (TSA).

QPE invested $130m in TSA Management in March 2021.

TSA Management is a project management consulting firm that specialises in providing independent project-based and advisory services to government and private sector clients. TSA works across a range of infrastructure and social infrastructure sectors, including road, rail, healthcare and education.

About Metrics Facility Agency and Security Trustee Services

Metrics dedicated Facility Agency and Security Trustee Services team partner with borrowers and banks globally to independently manage their multi-lender financing arrangements across a full range of industries and corporate and institutional clients.

22 November 2021

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