Mark Sherwood | June 22 , 2026
Private credit deal flow in Australia appears to have shifted. A year ago, the market dynamics saw corporate borrowers getting multiple offers of funding from private credit lenders, who were then forced to compete on price if they wanted to win the deal. The borrower commonly accepting the lowest yielding loan that’s being offered. Today, the market dynamics have shifted.
There appears to be fewer competitors providing capital. When corporate borrowers are seeking a loan, lenders with capital on hand, are able to win the deal against a reduced level of competition. The dynamic that has swung the pendulum has been inflows having slowed down broadly across the marketplace. This reduced liquidity creates a “capital scarcity premium.”
This slowdown is due to a combination of factors:
– Negative offshore headlines, driven by US-centric concerns. Software-sector exposures and redemption limits in some private credit funds having been a focus. While these issues have created negative sentiment and driven some allocations away from the sector, the consensus among commentators is that the private credit markets do not pose a systemic risk to the broader economy.
– Global geopolitical conflicts and the local RBA’s rate hikes. Cash rate now back up 4.35% which is the exact same level that prevailed before the recent cutting cycle that commenced in December 2024. This is fuelling consumer wariness and economic uncertainty, contributing to investors “sitting on cash” where they can earn a 4% return essentially risk-free.
What does this mean for the lender? A reduced volume of competitors for loans allows lenders, like iPartners, to enforce stricter covenant terms, better pricing for risk, and subsequent higher borrowing costs for the non-bank borrower. This shift effectively moves the market balance from a previous borrower’s market to a current lender’s market.
This environment offers opportunity where the risk-reward dynamic has shifted towards the lender. Essentially, the lender in the private credit asset class is the investor. The current environment of tightening credit and an increased cost of capital, historically present the best “credit opportunities” set.
This market dislocation is allowing our iPartners Credit Investment Fund, which has achieved a 9.53% per annum return since inception, with over six years of track record, to access better quality risk-adjusted investments positioning the fund to achieve or outperform its target returns.
Learn more about the iPartners suite of funds here: https://ipartners.com.au/funds-management/
