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 Innovate Reconciliation Action Plan

We are proud to share our second Reconciliation Action Plan (RAP), reaffirming our commitment to truth, healing and unity. We acknowledge the enduring injustices experienced by Aboriginal and Torres Strait Islander peoples and honour the strength, resilience and cultural continuity of the Traditional Custodians of Country across Australia.

At Metrics, we recognise Aboriginal and Torres Strait Islander peoples as the Traditional Custodians of this land and commit to contributing to a fair, equitable and sustainable future. Through this RAP, we aim to deepen respect, build genuine partnerships and help reduce systemic barriers.

Our new Innovate RAP builds on the foundations of our Reflect RAP and outlines the next steps in our reconciliation journey. We remain focused on creating meaningful and long-lasting relationships with Aboriginal and Torres Strait Islander individuals and organisations and fostering a workplace with greater cultural awareness and understanding.

Our Senior RAP Champion, Andrew Lockhart, Group CEO and Managing Partner, leads our internal engagement and ongoing commitment to reconciliation.

Read the full report

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