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 Reaffirms Commitment to Net Zero Asset Managers Initiative

Metrics Credit Partners (Metrics) is proud to reaffirm its ongoing commitment to the Net Zero Asset Managers (NZAM) initiative, strengthening its role in supporting global efforts to address climate change and deliver sustainable, long-term investment outcomes for investors.

This renewed commitment follows a 2025 review by NZAM’s Steering Committee to ensure the initiative remains fit for purpose in a rapidly changing global environment. The review aimed to balance ambition with practical implementation, and Metrics welcomes the outcome as a meaningful step in strengthening climate action across the asset management sector.

Metrics is also pleased to affirm its commitment to the goals of the Paris Agreement, helping limit global temperature increases and supporting a credible pathway to a low carbon future.

Building on this, Metrics will update the near-term targets it first set in 2022 in line with the latest guidance from the Science Based Targets initiative (SBTi). The firm remains focused on securing SBTi validation for its revised targets, which will include both near- and long-term objectives consistent with achieving net-zero emissions across its portfolio by 2050 under the SBTi Financial Institutions Net-Zero Standard.

As one of Australia’s leading alternative asset managers, Metrics recognises the critical role the sector plays in financing the transition to a low-carbon economy and is committed to transparency, ongoing improvement, and the responsible management of climate-related risks.

Metrics has measured the emissions of its operations and financing activities since 2021, which serves as the baseline for tracking progress against its targets. The firm is also proud to have been the first financial institution headquartered in Australia or New Zealand to formally commit to using the Partnership for Carbon Accounting Financials (PCAF) Standard.

“We welcome the 2025 NZAM review, which strengthens the focus on real‑economy impact and balances ambition with practical implementation. This provides investors with confidence that NZAM can support meaningful climate outcomes alongside strong long‑term performance, and underpins Metrics Credit Partners’ recommitment to the initiative.”

Alison Chan, Head of Responsible Investment and Sustainable Finance, Metrics Credit Partners.

Metrics’ published Climate Reports are available here: https://metrics.com.au/esg-responsible-investing/

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