Ares高管警示澳洲私募信贷受高利率与地产下行拖累，但明确不预期系统性信用紧缩

Elevated interest rates threaten to add further pressure on Australia’s private credit sector given its weighting to the country’s struggling real estate market, an Ares Management Corp. executive has warned.

Australia’s central bank has raised interest rates four times to 4.6% this year and signaled further tightening may come as it combats inflation. The higher borrowing costs add an extra burden on the country’s private debt market, Peter Graf, partner and head of Asia direct lending at Ares, one of the world’s largest private credit managers, said during the Citi Australia & New Zealand Investment Conference in Sydney on Tuesday.

“Interest rates being probably 4.6% today, if that stays, that’s obviously going to be tougher on the real estate sector as a whole,” Graf said. “So you’ve got to watch super closely in terms of what you’re underwriting, how those businesses are going, and then to be honest, how you end up working with those borrowers,” he added.

Private credit fund managers typically structure loans on a floating rate basis, so the interest paid by the borrower rises when underlying benchmark rates increase. This can deliver attractive yields for investors as rates rise, but may also increase the risk of default, given the higher burden to service the debt.

The dynamic may be acute in lending to property developers given Australia’s heavy weighting to real estate across the A$200 billion ($140 billion) private credit market during the current real estate downturn. Persistent inflation and higher rates have increased construction and borrowing costs, while home prices are falling.

For private credit funds targeting real estate, “underlying assets needs to be looked at very closely,” Graf said. “Cracks or stress is probably going to come through more,” he said.

Despite the pressure facing the sector, Graf does not anticipate a broader systemic credit squeeze, a sentiment shared by Mark Glengarry, head of APAC Private Credit Strategies for Blackstone Credit and Insurance, who also spoke during the event.

“Stress is is a good thing to actually allow people to understand dispersion and manage your performance and differentiation within the asset class,” Glengarry said.

The comments follow a period of turmoil that has included Sydney developer Bathla Group falling into insolvency in August owing around A$3.4 billion mainly to private debt funds. Multiple private credit funds have gated investor redemptions, while the corporate regulator has also targeted the sector. Major lenders including Goldman Sachs Group Inc. and UBS have also become more selective in the specialist financing they provide to private credit funds in Australia, raising concerns the sector may face liquidity constraints.

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Referring to Bathla Group, Graf said it was “quite a complicated structure with a number of different lenders and the number of different assets,” but that a number of lenders would likely be fine if they’d done their due diligence on the assets they underwrote. He said real estate senior loans that priced at 8%-9% six months ago, “today in the market may be 11 to 12%,” he said.

“You have maybe some projects which have been funded which wouldn’t otherwise be funded, but those those will be worked through,” Glengarry said. “And I think people will move on from that.”

Speaking on a separate panel at the conference, one of Australia’s largest pension funds said it worked with a select number of builders to do construction financing.

“We haven’t changed the way we are underwriting credit,” said Anne Moal, head of direct debt and illiquid credit at Cbus Super. “We do less of it, unfortunately, and we have found very hard to find opportunities.”