Investment redemption limits highlight more private credit risks, says Ian Verrender | The Business

There are fears further problems in private credit are emerging with MA Financial limiting redemptions on a property loan fund in response to market conditions, as investors worry about its exposure to property development.

ABC's chief business correspondent says any move to freeze or slow down investor redemptions is "significant", because the company is saying they are expecting a rush of investors to come, asking for their money back.

MA Financial's move to limit redemptions comes in the same week as the collapse of property developer Bathla Group. While the two issues are not formally linked, Mr Verrender says they do illustrate the liquidity and default risks linked to private credit which corporate regulator, ASIC, has previously warned about of. And Ian Verrender says those risks are amplified in a housing market downturn, which is what is happening now.

"Three interest rate hikes and potentially another one coming before the end of the year this year, and changes to investment rules with capital gains tax changes and negative gearing have all weighed on the market at the moment and property values are declining," he says.
"So that is going to tighten the profit margin for a lot of property developers."

When asked if the first cracks in Australia's private credit market are becoming apparent, Treasurer Jim Chalmers said "I don't think it's been a surprise to anyone that there's softness in our economy given all this global uncertainty and some of the system pressures in our economy, but I think it's really important we don't unnecessarily talk our economy down."

Mr Verrender says the Treasurer's response indicates that he doesn't want to sound the alarm on private credit.

"It's the same as the Reserve Bank governor will never say that things are looking pretty dire here and you better get your money out," he says
That's just going to create a run and that's precisely what no one wants to happen in this kind of situation."
#ABCBusiness
Subscribe: http://ab.co/1svxLVE
Read more here: https://www.abc.net.au/news/2026-08-26/asx-markets-business-live-credit-fund-limits-redemptions/107077366

Note: In most cases, our captions are auto-generated.

#ABCNEWS #ABCNEWSAustralia