Private Credit in Australia & NZ: Growth or Growing Pains?

he global private credit market is booming, projected to hit US$2.8 trillion by 2028. But as regulators sound alarms over liquidity risks and financial instability, what does this mean for Australia and New Zealand?

Here’s a breakdown of the key trends, risks, and opportunities—plus my take on how SMEs and lenders can navigate this evolving landscape.

🌍 Global Surge, Local Caution

Private credit is expanding rapidly due to tighter banking regulations and capital adequacy rules.
In the US, the market hit US$1.5 trillion in early 2024, with Chapter 11 protections fueling a dynamic (but risky) lending environment.
Regulators like the IMF and S&P Global warn of systemic risks: liquidity mismatches, leverage, and opaque asset valuations.

Australia: Smaller, Safer, But Growing

Australia’s private credit market reached A$205 billion in assets under management by late 2024.
The dominance of big banks and strong economic fundamentals reduce systemic risk.
Asset-based lending (ABL) and APRA/ASIC oversight provide insulation—but concentration in real estate lending remains a concern.

New Zealand: Scaling Up Slowly

NZ’s market is still in its infancy, with big banks controlling 80–90% of lending.
Warehouse financing is emerging as a key liquidity tool, with bankruptcy-remote structures and strict asset criteria.
Most funds are single-strategy and bespoke, reflecting a cottage-industry phase.

Strategic Insights for SMEs and Lenders

Private credit offers tailored solutions for SMEs that struggle with traditional bank loans or equity dilution.
Lenders must balance growth with governance—transparency, risk-adjusted returns, and due diligence are critical.
Asset-backed structures and short loan terms (2–4 years) enhance stability and investor confidence.

Contact Berzy Chartered Accountants today to learn how we can help your seasonal business thrive.

This post was inspired by Francesco Solfrini’s article in Acuity Magazine, published by Chartered Accountants ANZ.

Berzy Chartered Accountants & Mortgage Brokers are an accounting firm committed to delivering comprehensive financial solutions that empower individuals and businesses to achieve stability and confidence in their financial future