Australia’s private credit market is now “officially irresistible,” according to Msquared Capital, and stronger than the comparable market in the US.
In a note to investors, Msquared Capital managing director and co-founder Paul Miron said the local sector has crossed into global must-have territory and that late-arriving investors are increasingly venturing into riskier pockets of the market as the safest opportunities dry up.
Miron joined some of the world’s largest credit managers at the Australian Securitisation Forum in Sydney last week and says the surge in international demand has turned Australia into one of the “brightest stars in global debt markets,” even as supply struggles to keep pace.
A record $80 billion in Australian securitisation issuance over the past 12 months underscores the trend – surpassing previous highs and highlighting the strength of investor appetite.
“That record number reflects extraordinary investor demand, both internationally and here in Australia. Yet demand is outstripping supply, forcing larger players to move up the risk curve in search of exposure.
“The US private credit market may be larger, but Australia’s is stronger.”
According to Miron, investors are seeking discipline and global capital is pouring into Australia because of three fundamentals: conservative lending behaviour, resilient property markets and robust regulation.
For years, global institutions largely overlooked Australia’s conservative, property-anchored credit market. Miron says he was surprised to hear one global fund giant express regret at not entering earlier – not because opportunities have disappeared, but because the most coveted segment is now effectively full.
“As someone who has navigated both Australian and international credit cycles, I see Australia’s resilience as no accident. It is the product of conservative lending structures, strong regulatory oversight and a property market that has proven uniquely stable.”
According to an ASIC report, private credit in Australia is now valued at more than $200 billion and regulation remains one of Australia’s competitive advantages, Miron says, as well as APRA’s vigilance on property investor activity.
ASIC has already stated that private markets will be an enforcement priority for the corporate regulator in 2026, having conducted several reviews throughout 2025.
“Private markets are in the process of cleaning house – but our baseline remains strong when compared to other developed markets .. higher standards will level the playing field and protect both investors and borrowers,” Miron said.
‘Private credit cockroaches’
But Miron says opportunities remain unevenly distributed and risks are often misunderstood.
The irony is notable, he says, where investors once deterred by Australia’s conservatism now find themselves pursuing its riskier corners such as unsecured personal loans, credit card portfolios and auto finance.
“These are the exact segments in the US that have been called out for being the domain of ‘private credit cockroaches’; one collapse signals many more lurking.
“Not all private credit is equal, and not all collateral is created equal. Second mortgages, construction loans, rural properties and specialised securities carry higher risk profiles. Investors who fail to distinguish between them have greater risk of capital loss.”
Miron is also alert to emerging “red flags” that could test Australia’s resilience – including recent collapses in subprime, which highlight rising contagion risk for the lower socio-economic end of the debt spectrum.
He notes car repossessions in the US are at their highest since the GFC while global sovereign debt ratios sit at post-war highs in many markets.
“A black swan event could still test the system,” he said.
Tanarra Credit Partners managing partner Peter Szekely added ASIC’s increased regulatory oversight of troubled sectors should strengthen their confidence in the asset class.
“ASIC has been focused on a few key areas of concern in the local private credit market, including what sectors funds are invested in, how managers value portfolios, the potential conflicts that exist, and the importance of transparent reporting for investors.”
Despite this, Miron remains confident that the next 12 months will present meaningful opportunities.
“The property market is resilient, but repayment capacity is the true systemic risk. Unless we see a true black swan event or external shock that drives unemployment higher, both the property market and the debt underpinning it look secure for now.”
“The next 12 months will deliver opportunities, but only for those disciplined enough to distinguish between crowded segments and untapped niches – and realistic enough to prepare for the possibility of a macro shock.”
Szekely says attractive opportunities remain in the middle-market segment from a risk-return perspective.
“Private credit continues to be an attractive option for investors, particularly given the volatility we have been seeing in equity markets of late. It provides an excellent hedge against portfolio risk when building a diversified portfolio.”
