Current Unit Price: (20 min. delayed price) ASX:MXT $2.06 0.00%
NAV as at COB: 05.12.19 $2.0032
Current Unit Price: (20 min. delayed price) ASX:MOT $2.07 0.00%
NAV as at COB: 05.12.19 $2.0077

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Corporate loan market yields to non bank funders

Banking Day, 26 September 2019

Record low deposit rates and falling bond yields, along with reduced risk appetite for lending to the commercial property sector, have seen investors switch to non-bank corporate lenders.

Metrics Credit Partners, which claims to be Australia’s largest non-bank lender to the corporate sector has seen its loan portfolio double in the past two financial years.

The firm, which started with A$75 million in initial capital six years ago, now manages more than A$5 billion in current loans with more than 130 entities.

Managing partner Andrew Lockhart stated at a media presentation in Sydney yesterday that his firm is the first non-bank lender able to raise capital directly from superannuation funds (along with other institutional and wholesale investors, charities and universities.)

Lockhart also said 34 per cent of his firm’s lending portfolio is directed to commercial property transactions as a result of banks pulling back from the sector, under pressure from prudential regulator APRA.

Metrics has also taken an equity interest in two non-bank financial services players, one a residential mortgage provider and the other a motor vehicle finance firm.

On the other side of the balance sheet, Metrics’ target loan market is large diversified entities, either via secured debt (which accounts for 80 per cent of Metrics’ investments) as part of a syndicated loan, or as more aggressive mezzanine debt.

For instance, Metrics Partners is working with private equity firm Anchorage “and one other lender” to provide funding for an acquisition, although Lockhart was coy about the client.

Metrics’ list of corporate borrowers includes ASX heavyweights such as Woolworths, Patrick Terminals and Origin Energy. (Metrics participated in a $550 million syndicated loan to Origin Energy in February this year).

Lockhart also took aim at what he considers unethical conduct by some of his competitors, particularly those lending to the unrated property development sector.

He said those lenders were facilitating deception on the part of a borrower by encouraging nondisclosure of mezzanine debt, which has been disguised as “an unregistered second ranking charge”, to the detriment of first-ranking secured creditors.

“It is a poor market practice for two reasons: a borrower has an obligation to disclose [a second mortgage] to a bank or secured creditors; and, this [action] makes it very difficult for investors, as any securities held in escrow and not disclosed until a default when they seek to register a mortgage was likely to be challenged by an administrator,” Lockhart said.

“Our concern is that those lenders are achieving the same returns [as us] but we are taking a lower risk.”

 

Current Unit Price: (20 min. delayed price) ASX:MXT $2.06 0.00%
NAV as at COB: 05.12.19 $2.0032
Current Unit Price: (20 min. delayed price) ASX:MOT $2.07 0.00%
NAV as at COB: 05.12.19 $2.0077

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Disclaimer and disclosure

All website content in respect of the MCP Master Income Trust ARSN 620 465 090 (the Trust) is issued by The Trust Company (RE Services) Limited ABN 45 003 278 831 AFSL 235 150 (Perpetual) as responsible entity of the Trust and is prepared by Metrics Credit Partners Pty Ltd ABN 27 150 646 996 AFSL 416 146 (Metrics) as the investment manager of the Trust.

The information provided in this website is of a general nature only and has been prepared without taking into account your objectives, financial situation or needs. Before making an investment decision in respect of the Trust, you should consider the current product disclosure statement (PDS) of the Trust and the Trust’s other periodic and continuous disclosure announcements lodged with the ASX, which are available at www.asx.com.au/, and assess whether the Trust is appropriate given your objectives, financial situation or needs. If you require advice that takes into account your personal circumstances, you should consult a licensed or authorised financial adviser.

Neither Perpetual nor Metrics guarantees repayment of capital or any particular rate of return from the Trust. Neither Perpetual nor Metrics gives any representation or warranty as to the currency, reliability, completeness or accuracy of the information contained in this website. All opinions and estimates included in this website constitute judgments of Metrics as at the date of website creation and are subject to change without notice. Past performance is not a reliable indicator of future performance.

Cororate Governance
Personal Trading in Non-Perpetual Securities | RE Services Personal Trading in Non-Perpetual Securities | Unitholders Communications Policy | Continuous Disclosure Policy

The Zenith Investment Partners (ABN 27 103 132 672, AFS Licence 226872) (“Zenith”) rating (assigned May/2019) referred to in this document is limited to “General Advice” (s766B Corporations Act 2001) for Wholesale clients only. This advice has been prepared without taking into account the objectives, financial situation or needs of any individual and is subject to change at any time without prior notice. It is not a specific recommendation to purchase, sell or hold the relevant product(s). Investors should seek independent financial advice before making an investment decision and should consider the appropriateness of this advice in light of their own objectives, financial situation and needs. Investors should obtain a copy of, and consider the PDS or offer document before making any decision and refer to the full Zenith Product Assessment available on the Zenith website. Past performance is not an indication of future performance. Zenith usually charges the product issuer, fund manager or related party to conduct Product Assessments. Full details regarding Zenith’s methodology, ratings definitions and regulatory compliance are available on our Product Assessments and at http://www.zenithpartners.com.au/RegulatoryGuidelines

Disclaimer and disclosure

All website content in respect of the MCP Income Opportunities Trust ARSN 631 320 628 (the Trust) is issued by The Trust Company (RE Services) Limited ABN 45 003 278 831 AFSL 235 150 (Perpetual) as responsible entity of the Trust and is prepared by Metrics Credit Partners Pty Ltd ABN 27 150 646 996 AFSL 416 146 (Metrics) as the investment manager of the Trust.

The information provided in this website is of a general nature only and has been prepared without taking into account your objectives, financial situation or needs. Before making an investment decision in respect of the Trust, you should consider the current product disclosure statement (PDS) of the Trust, and the Trust’s other periodic and continuous disclosure announcements lodged with the ASX, which are available at www.asx.com.au, and assess whether the Trust is appropriate given your objectives, financial situation or needs. If you require advice that takes into account your personal circumstances, you should consult a licensed or authorised financial adviser.

Neither Perpetual nor Metrics guarantees repayment of capital or any particular rate of return from the Trust. Neither Perpetual nor Metrics gives any representation or warranty as to the currency, reliability, completeness or accuracy of the information contained in this website. All opinions and estimates included in this website constitute judgments of Metrics as at the date of website creation and are subject to change without notice. Past performance is not a reliable indicator of future performance.

Cororate Governance
Personal Trading in Non-Perpetual Securities | RE Services Personal Trading in Non-Perpetual Securities | Unitholders Communications Policy | Continuous Disclosure Policy

The Zenith Investment Partners (ABN 27 103 132 672, AFS Licence 226872) (“Zenith”) rating (assigned May/2019) referred to in this document is limited to “General Advice” (s766B Corporations Act 2001) for Wholesale clients only. This advice has been prepared without taking into account the objectives, financial situation or needs of any individual and is subject to change at any time without prior notice. It is not a specific recommendation to purchase, sell or hold the relevant product(s). Investors should seek independent financial advice before making an investment decision and should consider the appropriateness of this advice in light of their own objectives, financial situation and needs. Investors should obtain a copy of, and consider the PDS or offer document before making any decision and refer to the full Zenith Product Assessment available on the Zenith website. Past performance is not an indication of future performance. Zenith usually charges the product issuer, fund manager or related party to conduct Product Assessments. Full details regarding Zenith’s methodology, ratings definitions and regulatory compliance are available on our Product Assessments and at http://www.zenithpartners.com.au/RegulatoryGuidelines

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