ASIC warns on EOFY private credit valuations

Mike Taylor

Managing Editor and Publisher

19 June 2026

The Australian Securities and Investments Commission (ASIC) has confirmed active surveillances are underway with respect to private credit across wholesale and retail funds together with multiple enforcement investigations.

The regulator has declared that it has put “private credit on notice” ahead of the 30 June valuations and reporting stating that funds need to ensure that asset valuations are current, accurate and grounded in realistic assumptions.

“The sector is facing its first real test,” ASIC said. “Tighter liquidity, emerging borrower stress and signs of credit deterioration are testing valuations, governance and investor disclosures.”

The regulator said early insights from its private credit work indicate the market is moving from a period of rapid growth into a more demanding phase with persistent macroeconomic pressure and a slow creep in credit stress indicators.

It said early insights from its eight week voluntary survey conducted between mid-March and mid-May identified the following trends:

Market Conditions

• Credit deterioration is emerging unevenly with pockets of higher defaults, impairments, and loan amendments.
• Redemption requests remain contained in aggregate, with higher activity observed in some feeder funds investing in global private credit managers.
• Leverage and line of credit usage remain minimal.
• Most funds continue to manage liquidity adequately, although buffers are tightening.
• Macroeconomic pressures, including inflation, rising costs and supply disruptions, are affecting borrower performance.
• Softer investor inflows are slowing growth and tightening lending conditions.
• Growth in number of funds has notably slowed.
• Management of concentration risk is variable

ASIC pointed to the fact that, in the United States and Europe, conditions are already driving rising defaults, valuation uncertainty and redemption pressures.

“Australia’s market has acknowledged structural differences, including greater exposure to real asset-backed loans in construction and property. But those differences are not a defence against risk,” it said.

“Retail investor and superannuation exposure is increasing, and recent isolated incidents have highlighted how Australian retail investors can be exposed to offshore redemption constraints and liquidity pressures through local feeder funds. There are inherent linkages between the international and domestic markets as with all global financial markets.”

ASIC said that, when done well, private credit provides an important source of funding and supports economic growth and innovation.

“But weaknesses in governance, disclosure, valuation practices and conflicts management become more pronounced as conditions tighten,” it said.

“ASIC is probing these and other issues across the sector. Active surveillances across wholesale and retail funds are well progressed and multiple enforcement investigations are underway.

“ASIC continues to engage with industry bodies on stronger standards across retail and wholesale funds and review financial reports and audit files for private companies and superannuation funds,” it said.

The regulator said that poor practices in private credit remain one of its current enforcement priorities and that it will act where conduct falls short.

“These obligations cannot be outsourced. Participants must ensure that all those in their funds management value chain—from origination through to audit—are meeting their responsibilities to support participants’ obligations.

“ASIC’s message is straightforward: participants should use this reporting cycle to challenge assumptions, refresh valuations, and lift practices in line with ASIC’s ten principles,” ASIC said.