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.

Origin completes A$550 million refinancing – Metrics increases commitment

February 2019 – Origin Energy has completed a A$550 million refinancing with Metrics reconfirmed as a syndicate lender.

The facility was upsized due to significant lender demand in the syndicated loan market.

The energy giant had been looking to refinance this facility as part of a strategy to extend its debt maturity profile and to maintain a resilient, diversified capital structure.

Origin in February announced a first-half statutory profit of $796 million for the six months ended December 31, 2018 and is now focused on pursuing strategic opportunities for growth.

The syndication drew strong interest from a variety of lenders. Metrics’ decision to participate in the latest lending facility comes on top of its existing loan commitment to the energy company.

The financing was successfully closed in February 2019.

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