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’ Modern Slavery Statement

Metrics acknowledges that modern slavery can occur in every industry and geography and has severe consequences for victims. It is critical that governments and businesses take action to eliminate human exploitation.

We would like to communicate our commitment to respect human rights in our operations and value chain, which includes taking steps to assess, address and report on any potential modern slavery risks. As part of this process, Metrics has been actively working towards enhancing its approach to identifying and managing modern slavery and broader human rights risks in its value chain.

We are proud to have pledged our commitment to the United Nations Global Compact and support its Ten Principles on human rights, labour, environment, and anti-corruption. We are participating in the UN Global Compact Network Australia‘s 2023 Business and Human Rights Accelerator program and are an official endorser of the UN Principles for Responsible Investment initiative ‘Advance’, a stewardship initiative where institutional investors work together to take action on human rights and social issues.

Metrics has voluntarily prepared a Modern Slavery Statement following the requirements and reporting criteria under the Australian Modern Slavery Act 2018 for the 2022 reporting period.

To find out more about our activities, you can view our Statement below.

METRICS MODERN SLAVERY STATEMENT

06 July 2023

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