The credit market is moving off-balance sheet

Private credit has become the default alternative when banks move slowly, tighten underwriting, or walk away from a deal entirely. For mid-market borrowers, it is less a substitute than a new operating system for capital.

The trade-off is clear: capital is more expensive, but certainty and speed carry their own value. That is why institutional allocators are continuing to expand their exposure.

Your Bank Said No. They Said Yes.

PRIVATE CREDIT · Intelligence Brief · Rookonomy

The Short Version

Private credit is the $2 trillion shadow lending machine quietly replacing banks for businesses that need money fast. After the GFC, banks got scared and pulled back. Private funds stepped in. Now they're everywhere — from Blackstone buying an A$36B HSBC mortgage book to Australian super funds chasing returns outside the ASX. It's reshaping how capital moves, and most people still haven't clocked it.

The Numbers

Okay But What Actually Is This

Picture this. You're a mid-sized business. You need $50 million to fund an acquisition. You walk into a major bank. They give you a six-month process, a stack of compliance forms, and ultimately say no because the deal's too complex for their risk appetite.

So you call a private credit fund instead.

Private credit also called private debt is lending that happens completely outside traditional banks and public bond markets. A fund lends directly to a company. The terms are negotiated privately. The loan isn't traded publicly. And the whole thing moves in weeks, not months.

That's the pitch. Speed, flexibility, and a lender that actually wants to do the deal.

Why This Even Exists

Two words: the GFC.

After 2008, regulators cracked down hard on banks. Higher capital requirements. Stricter rules on risky lending. More hoops to jump through on complex deals. Banks retreated from leveraged finance, commercial real estate, anything that looked messy.

That left a massive gap in the market. Private credit funds walked right in.

Fast forward to today and the trend hasn't slowed, it's accelerated. Businesses want speed and customisation. Banks are still cautious. The gap just keeps growing.

The Australian Story Is Wild

The global headline is US$2 trillion. But the Australian angle is actually more interesting for us locally.

The ANZ private credit market has hit somewhere between A$200 billion and A$234.5 billion and is growing at roughly 21% annually. That's not niche. That's a structural shift in how Australian business finance gets done.

The deal that changed the conversation:

In 2023, Blackstone acquired HSBC's Australian mortgage book - a A$36 billion portfolio. That's the largest private credit deal in Australian history. One deal. Thirty-six billion dollars. It signalled that global private credit giants weren't just dipping a toe in the Australian market. They were diving in.

The local player:

Metrics Credit Partners, Australia's largest non-bank corporate lender, manages approximately A$40 billion in AUM. They've built an institutional-grade private credit operation here that's now competing directly with the big four banks for corporate deals.

The blocked deal that told everyone what's at stake:

When Brookfield tried to acquire Origin Energy for A$18 billion in 2023, it collapsed partly because the private credit financing structure drew too much scrutiny. It showed that private credit isn't just a lending tool anymore, it's reshaping how M&A itself gets structured.

What's Actually Different About Borrowing From a Private Fund

Here's the breakdown for anyone who needs it:

Speed. Banks take months. Private credit deals close in weeks. When you're trying to move on an acquisition before someone else does, that speed is worth paying a premium for.

Customisation. Banks have standard products. Private credit funds can build a deal around your specific situation, interest-only periods, flexible repayment terms, equity kickers. If you need something unusual, there's usually a structure for it.

Access. Some businesses are too small or too complex for public bond markets. Private credit is often their only real option.

Relationship. With a bank, you're one of thousands of clients routing through a compliance system. With a private credit fund, you're often dealing directly with the decision-makers.

The trade-off? It costs more. Private credit loans carry higher interest rates than traditional bank loans. For borrowers who need speed and flexibility, that premium is usually worth it.

The Distressed Side: Where It Gets Interesting

Private credit isn't just about healthy businesses wanting to grow. A meaningful chunk of the market is distressed debt, lending to companies in financial trouble, often at a significant discount.

Two Australian examples that are worth knowing:

Accolade Wines entered voluntary administration in 2024 with around A$800 million in debt. Private credit funds were central to the restructuring conversations, the kind of complex, time-sensitive debt negotiation that traditional banks struggle to execute quickly.

GenesisCare, the cancer treatment provider, filed for Chapter 11 in the US while simultaneously managing Australian operations. The restructuring involved private credit holders negotiating outcomes that a standard bank syndicate would have found nearly impossible to coordinate.

These aren't edge cases. With Australian external administrations hitting 14,650 in 2025 - a post-GFC high, distressed private credit is becoming a genuine sub-sector of its own.

Follow the Money

The whole chain works because everyone gets something. The borrower gets speed and flexibility. The fund earns higher yields. The institutional investors including your superannuation fund get returns that public markets can't always deliver.

The Rook's Take

Here's what I actually think after going through all of this.

Private credit's growth story makes sense when you understand what it's replacing. Banks didn't get less useful they got more constrained. Regulation pushed them toward vanilla, low-risk products. Private credit funds filled everything else.

What's interesting from an Australian perspective is that our super funds are both driving the growth (as investors) and potentially being affected by it (as holders of bank equity that now faces more competition). The RBA has flagged this as a potential systemic risk, what happens if private credit losses materialise at scale and hit super balances?

ASIC's 2025 review called out real gaps: disclosure issues, fee structures, governance problems, valuation opacity. These aren't minor. If the sector keeps growing at 21% annually without better guardrails, the next credit cycle could get messy.

The paradox I can't stop thinking about: banks and private credit funds increasingly need each other. Banks are offloading loans to private funds (see: Blackstone/HSBC). Private funds are using bank credit facilities to operate. It's less "disruption" and more "symbiosis." Which means if one side has a bad quarter, the other feels it.

What Happens Next

3–6 months: ASIC is expected to finalise updated disclosure requirements for retail investors exposed to private credit via managed funds. Watch for announcements.

2026–2027: The A$3.4 trillion global projection will either hold or crack depending on whether the credit cycle turns. Australian insolvency rates staying elevated is not a good sign for the distressed segment.

Medium-term: More Australian super funds will increase private credit allocations directly, bypassing fund managers. AustralianSuper and Aware Super have both signalled appetite for this.

The wildcard: If the RBA cuts rates further, floating-rate private credit becomes less attractive relative to fixed-rate alternatives. Watch rate movements carefully.

Go Deeper

• RBA Financial Stability Review - systemic risks section covers private credit exposure

• ASIC's 2025 private credit market review (search: ASIC private credit 2025)

• Metrics Credit Partners investor updates (mcp.com.au)

• Preqin Global Private Debt Report 2026

• Australian Financial Review - private credit coverage, particularly the Blackstone/HSBC deal analysis

Rookonomy publishes financial intelligence for people learning to see the move. Not financial advice.