Australia’s private credit market is facing another test after Metrics Credit Partners temporarily suspended investor redemptions from certain funds and delayed financial reporting for three listed investment vehicles.

Metrics, which manages approximately A$40 billion, said its auditor KPMG would not sign off on the full-year accounts of three listed funds before the September 30 reporting deadline. The development adds to concerns about valuation practices and liquidity in a rapidly expanding non-bank lending sector.

Three Listed Funds Remain Suspended

The affected vehicles are the Metrics Real Estate Multi-Strategy Fund, Metrics Income Opportunities Trust and Metrics Master Income Trust. Their units have been suspended from trading on the stock exchange since Monday after Metrics disclosed reductions in their asset values.

Metrics said the underlying unlisted funds that feed into the listed vehicles have now also temporarily suspended investor redemptions. The listed funds are expected to remain suspended until audited financial reports are submitted.

Valuation Disagreement Raises Questions

The reporting delay stems from a disagreement between Metrics and KPMG over assumptions used in preliminary financial statements. One of the areas of disagreement involves the calculation of fair value for unlisted commercial real estate equity investments.

Valuation is particularly important for private credit and other less-liquid investments because assets that do not trade frequently may require assumptions to determine their current market value. Differences over those assumptions can become more significant when underlying property markets are weakening or investors seek to withdraw capital.

Regulators Already Watching the Sector

The Metrics development follows a warning from Australia’s corporate regulator about conditions in the private credit industry. Regulators recently raised concerns about unrealistic valuations and governance practices and warned that firms failing to meet expected standards could face enforcement action.

The warning followed the collapse of property developer Bathla Group, which entered administration in August with approximately A$3 billion owed to around 40 lenders. The episode has increased attention on the connections between private credit providers, property developers and broader real estate conditions.

Property Exposure Adds to the Risk

Australia’s private credit industry has expanded rapidly and has significant exposure to property. That exposure is becoming more important as higher interest rates and changes to housing-related taxes weigh on the property market.

For lenders, weaker property valuations can affect collateral values and the perceived worth of investments. For investors in private credit funds, the combination of less-liquid assets, valuation uncertainty and redemption requests can create additional liquidity challenges.

What Could Come Next for Private Credit?

The Metrics situation provides another indication of the pressures emerging within Australia’s non-bank lending sector, although the source does not establish that the problems at the three funds represent broader systemic stress across the entire private credit market.

Investors will likely focus on the eventual audited valuations, the timing of resumed trading and redemptions, and how regulators respond to valuation and governance concerns. Developments in Australia’s commercial property market will also remain important because further declines could place additional pressure on funds with significant real estate exposure.